Mr. Brown wants to buy a Tesla Model S car, whose price is $100, 848. The dealer offers a loan plan: $30, 000 down payment, $X at the end of year 1, year 2, year 3, and year 4. Assume the constant annual interest rate is 25%.

(a) What is X? [Hint: you may want to use calculators.]

(b) Suppose Mr. Brown accepts the offer. How much does Mr. Brown finance?

(c) What is the principle payment at the end of year 1?

(d) After taking the auto loan, Mr. Brown gets a refinance opportunity at the end of year 1 (right after he makes the first payment). That is, Mr. Brown can borrow from the bank to pay all remaining principle at the end of year 1. In this refinance plan, Mr. Brown needs to pay the bank $25, 000 at the end of year 2, year 3, year 4, and year 5. Will Mr. Brown choose to refinance? [Hint: the interest rate is still 25%. Mr. Brown will choose to refinance if and only if the NPV of the refinance plan is positive.]

Please focus on (d).