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Please help! Will give thumb up Car dealers often offer incentives to lure consumers into buying a car. These incentives often take the form of
Please help! Will give thumb up
Car dealers often offer "incentives" to lure consumers into buying a car. These incentives often take the form of various financing structures for how consumers would borrow money to pay for the car. Perhaps the most common incentive is when car dealers advertise the opportunity to choose between a "0% APR" or a "Cash Rebate" option (sometimes called a Cash Allowance). It can be difficult to determine which option is the best for you - so you'll need to do the math! Note: the term "APR" is another name for nominal interest. For car dealer incentives, the compounding period is always monthly (hence why car payments are made monthly) Consider this advertisement for a 2015 Chevrolet Malibu 2015 CHEVROLET Malibu Cash Allowance $1,500 consumer Cash Bed Full 2015 CHEVROLET Mastu Not available with finance or lease offers Take delivery by 08 31-2015 Residency restrictions apply See dealer for details SUCI Model Overview ViewIwatery 2015 CHEVROLET Malibu Finance Specials 0% APR for 72 months TAM DEL Some Sony NO matay Table 1: Key Details of the Chevy Malibu Financing Incentive Terms of the Incentive Manufacturer's Suggested Retail Price (MSRP) Cash Rebate Offered APR (nominal, compounded monthly) Specified Term of the Loan 0% APR Option $23,290 So 0.0% 72 months Cash Rebate Option $23.290 $1,500 1.9% 72 months The total cost of borrowing (amount of interest paid) in the "0% APR option is: (Please round your answer to the nearest whole number (I.e. 1,234.49 = 1234), don't use any symbols in you answer .. $)) Enter your answer here Save Answer Q13.6 1 Point The total amount of extra Principle of the "O% APR option is: (Please round your answer to the nearest whole number (I.e. 1,234.49 = 1234), don't use any symbols in you answer [..$)) Enter your answer here Save Answer Q13.7 1 Point The total cost of borrowing (amount of interest palc) in the "Rebate" option is: (Please round your answer to the nearest whole number (.e. 1,234.49 = 1234), don't use any symbols in you answer ($)) What is the breakeven interest rate, i.e. what APR would need to be charged in the "Rebate Option to make its monthly payment equivalent to the *0% APR" option? Enter your answer here Step by Step Solution
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