Question
Imagine you are in the market for a new car, and you found a dealer you trust. Among all the models on the lot, you
Imagine you are in the market for a new car, and you found a dealer you trust. Among all the models on the lot, you found a great car. After all taxes and fees are included, the final cost of the car is $24,035. One of the reasons you like this dealer is that hes given you three options to kick-start your loan: 1. Use a $1500 rebate offered by the dealership and finance with them for 6% APR compounded monthly for 60 months. 2. 2. The dealership offers you 0% financing for the first 3 years, with 6% APR compounded monthly for the final 2 years. 3. Your bank offers you 4% APR compounded monthly for 5 years. Analyze these three options using the Amortization Formula and decide which one of them is the best deal. Justify your answer by clearly computing your monthly payments over 60 months under each of the three options. Make sure your answers are clearly labeled and back up your calculations by explaining in English why your answer is the best deal.
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