The total that goes to Jen the total finance charge, based on the cost of the vehicle, is $6, 603
First, find the amount that Jen borrowed to buy the car:
= Cost of vehicle x ( 1 - down payment)
= 35, 000 x (1 - 20%)
= $28, 0000
The total amount that Jen would pay is:
28, 000 = Annuity x ( 1 - ( 1 +rate) ^ -number of years) / rate
28, 000 = Annuity x (1 - (1 + 7.5%)⁻⁵) / 7.5%
Annuity = 28, 000 / 4.04588
Annuity = $6, 920.62
Total finance charge is:
= (6, 920.62 x 5 years) - 28, 000
= $6, 603
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