1. Choose a new car to buy. It can be a realistic purchase or your dream car. Figure out the costs of buying this car by filling in the blanks below. You can pay a 10 percent down payment, and your credit history is good enough to get a five-year loan with an interest rate of 5 percent. Make/Model:

Manufacturers suggested retail price (MSRP):

Cost of options (if applicable):

Sales tax of 9 percent (the MSRP, plus any options, multiplied by 0.09):

Total cost (the MSRP, options costs, and sales tax added together):

10 percent down payment (total cost multiplied by 0.1):

Amount needed to borrow (total cost minus the down payment):

Estimated total interest paid (amount borrowed multiplied by 0.05, or 5 percent, per year for five years):

Actual cost of the car (total cost plus the total interest paid):

2. Now find a used car to buy, and figure out the costs of buying this car by filling in the blanks below. You don't have enough money for a down payment, and your credit history is so new that you have to get a five-year loan with an interest rate of 10 percent to make the purchase.

Make/Model:

Asking price:

Sales tax of 9 percent:

Total cost:

Estimated total interest paid (amount borrowed multiplied by 0.1, or 10 percent, per year for five years):

Actual cost of the car (total cost plus the total interest paid):

3. If you were going to buy one of these two cars tomorrow, which car would you choose, and why?