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Chapter 7 Financial Planning Exercise 8 Calculating payments, interest, and APR on auto loan

After careful comparison shopping, Isabella Green decides to buy a new Toyota Camry. With some options added, the car has a price of $23,500 - including plates and taxes. Because she can't afford to pay cash for the car, she will use some savings and her old car as a trade-in to put down $11,500. She plans to finance the rest with a $12,000, 60-month loan at a simple interest rate of 12 percent.

1. What will her monthly payments be? Round the answer to the nearest cent. $ per month
2. How much total interest will Isabella pay in the first year of the loan? Round the answer to the nearest cent. $
3. How much interest will Isabella pay over the full (60-month) life of the loan? Round the answer to the nearest cent. $
4. What is the APR on this loan? Round the answer to 1 decimal place. %

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