Suppose you take out a five-year car loan for $14000, paying an annual interest rate of 3%. You make monthly payments of $252 for this loan. Getting started (month 0): Here is how the process works. When you buy the car, right at month 0. you owe the full $14000. Applying the 3% interest to this (3% is "3 per $100" or "0.03 per $1"), you would owe 0.03*$14000 = $420 for the year. Since this is a monthly loan, we divide this by 12 to find the interest payment of $35 for the month. You pay $252 for the month, so $35 of your payment goes toward interest (and is never seen again...), and (252-35) = $217 pays down your loan. (Month 1): You just paid down $217 off your loan, so you now owe $13783 for the car. Using a similar process, you would owe 0.03*$13783 = $413.49 for the year, so (dividing by 12), you owe $34.46 in interest for the month. This means that of your $252 monthly payment, $34.48 goes toward interest and $217.54 pays down your loan. The values from above are included in the table. Continue the process for the rest of the first year of the loan. Months Amount still owed 0 1 2 3 4 5 6 7 8 9 10 11 12 14000 13783 13565.46 Monthly interest paid 35 34.46 Amount of monthly payment that goes toward paying off the loan (after paying interest) 217 217.54 What is the total amount paid in interest over this first year of the loan?