Mike is planning to purchase a new pickup truck to replace the old one, and has received information (flyers, outdoor advertisings, radio, etc.) that many vehicle manufacturers are offering special deals to sell off the current years vehicles before the new models arrive. Mikes local Ford dealership is advertising 3.9% financing for a full 48 months (i.e., 3.9% compounded monthly) or up to $8000 cash back on selected vehicles plus trade-in value (trade-in means used car is sold to the dealer for part of the payment for new car). The vehicle that Mike wants to purchase costs $68,600 including taxes, delivery, licence, and dealer preparation. This vehicle qualifies for $5000 cash back if Mike pays cash for the vehicle, and the trade-in value for his current pickup truck is $3500. Mike has a good credit rating and knows that he could arrange an auto loan at his bank for the full price of any vehicle he chooses. His other option is to take the dealer financing offered at 3.9% for 48 months. Mike wants to know which option requires the lower monthly payment. He knows he can use annuity formulas to calculate the monthly payment. BUSI1003 Math for Business_Project 3 QUESTIONS 1. Suppose Mike buys the vehicle on July 1. What monthly payment must Mike make if he chooses the dealers 3.9% financing option and pays off the loan over 48 months? (Assume he makes each monthly payment at the end of the month and his first payment is due on July 31.) 6 marks 2. When discussing details of purchasing the pickup truck, Mike is considering another model with higher price. The more expensive vehicle costs $74,900 in total and qualifies for the 3.9% dealer financing for 48 months or $2500 cash back plus trade-in value. What is the highest effective annual rate of interest at which Mike should borrow from the bank instead of using the dealers 3.9% financing? 10 mark