1.Elaine wants to buy a new Ford Truck.She sees the following ad:

2019 Ford F-150 Lariat Truck EcoBoost V6 Engine

0% APR for 66 mos.

Ford Credit Financing

OR

$10,000

Cash Back

(a)She has negotiated a sales price of $46,585 and she has a $15,000 down payment. She is eligible for the full $10,000 cash rebate. Her bank has pre-approved her for a 72-month car loan at 3.24%.Assuming Elaine wants the cheapest overall price, which option should she take?Should she take the 0% financing offer for 66 months from the dealer, or should she borrow the money from her bank at 3.24% to pay off the dealer and receive the $10,000 cash rebate?

Bank option:

N=

I/Y=

PV=

PMT=

FV=

Dealer option:

N=

I/Y=

PV=

PMT=

FV=

Answer and explanation: