Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced. 

To buy a car, you borrow $26,000 with a term of five years at an APR of 8%. What is your monthly payment? (Round your answer to the nearest cent.) 

$  

How much total interest is paid? (Round your answer to the nearest cent.) 

$ 

a. = $527.19

b. = $5631.40

Step-by-step explanation

a. The monthly payment of the loan is given as follows:

we use the formula for the monthly payment of the present value of an annuity payment which is given as follows:

M = P(i/m)/[(1-(1+i/m)^-mn)]

where P = $26,000 (present value of the loan), i = 8%, m = 12 (interest compounded monthly), n = 5 years

therefore,

M = $26000(0.08/12)/[(1-(1+0.08/12)^-12*5)]

M = $527.1862515

M = $527.19

b. The interest is given as follows:

interest = amount paid - present value of the loan

amount paid = monthly payment * total payment period

amount paid = $527.19 * 12 * 5

amount paid = $31631.40

present value of the loan = $26000

therefore,

interest = amount paid - present value of the loan

interest = $31631.40 - $26000

interest = $5631.40