Question
1. Use the information for the question(s) below. You are in the process of purchasing a new automobile that will cost you $27,500. The dealership
1. Use the information for the question(s) below. You are in the process of purchasing a new automobile that will cost you $27,500. The dealership is offering you either a $2500 rebate (applied toward the purchase price) or 1.9% financing for 48 months (with payments made at the end of the month). You have been pre-approved for an auto loan through your local credit union at an interest rate of 6.5% for 48 months. If you take the $2500 rebate and finance your new car through your credit union your monthly payments will be closest to:
$520 | ||
$573 | ||
$799 | ||
$593 |
2.
Wesley Mouch's auto loan requires monthly payments and has an effective annual rate of 7.43%. The APR on this auto loan is closest to:
7.19% | ||
7.62% | ||
7.50% | ||
7.43% |
3.
Rearden Metal needs to order a new blast furnace that will be delivered in one year. The $1,000,000 price for the blast furnace is due in one year when the new furnace is installed. The blast furnace manufacturer offers Rearden Metal a discount of $60,000 if they pay for the furnace now. If the interest rate is 7%, then the NPV of paying for the furnace now is closest to:
($6,729) | ||
($5,421) | ||
$5,421 | ||
$6,729 |
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