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You are buying a new Porsche Boxter, priced at $65,200. You will pay $4,700 now and the rest monthly, in a four-year loan. All rates
You are buying a new Porsche Boxter, priced at $65,200. You will pay $4,700 now and the rest monthly, in a four-year loan. All rates are monthly compounded APRs. The automobile dealership is offering a sales promotion where either: You will receive a $2,000 discount cheque now and the annual interest rate on the loan is 6.1%, or The annual interest rate on the loan will be 1.2% but there is no discount. Compare the two options by calculating the present value of each option, assuming the discount rate is 8%.
You are buying a new Porsche Boxter, priced at $65,200. You will pay $4,700 now and the rest monthly, in a four-year loan. All rates are monthly compounded APRs. The automobile dealership is offering a sales promotion where either: a. You will receive a $2,000 discount cheque now and the annual interest rate on the loan is 6.1%, or b. The annual interest rate on the loan will be 1.2% but there is no discount. Compare the two options by calculating the present value of each option, assuming the discount rate is 8%. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) Option a Option b Present Value $ 58500 $ 52903.9 Which option is a better deal? Option a Option bStep by Step Solution
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