You are thinking of buying a used car for $12,000(including tax) for driving to school. Your parents are willing to lend you the $5000. You need to borrow the rest from the bank who charges 8% APR.

They want the money paid equally in 48 monthly payments, with the first payment due at the end of the month in which you buy the car. Your annual discount rate is 8%. Show work in detail

a. How much money do you owe the bank every month?

b. You estimate that the monthly cost of operating the car including gas, insurance, maintenance and license fees will be $200 and be able at the start of each month. You expect that the car will be mostly worn out in four years come up with only a $2000 resale value. What is the monthly payment you need to make when you also account for operating costs and resale value? [2.5]