Amal is planning to purchase a car. The sticker price is $35,000. Provincial sales taxes of 15% would apply. Amal has $5,000 to use as a down payment. The bank will charge her 7.75% on her car loan, compounded monthly. She will make monthly loan payments.

Part a

How much would Amal save if she paid the car off over 4 years instead of 5 years?

Part b

Assuming she chooses to pay the car off over 5 years, how much interest will she pay in the first year of her loan?

Part c

What is the effective annual rate that Amal is paying on her car loan?