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You are considering buying a new Subaru automobile. The price of the car is $36,172, and you'll pay 11% of that today as a down
You are considering buying a new Subaru automobile. The price of the car is $36,172, and you'll pay 11% of that today as a down payment, and then finance (borrow) the remainder. You have two financing options: The first is to use the local bank who is advertising an APR of 5.4% with monthly compounding. Payments to the bank will begin 4 months from today and end 48 months from today. If you finance with the bank, all payments will be equally sized. Alternatively, you can borrow from the car dealer who is offering a promotional interest rate of 3.7% APR with monthly compounding. Payments to the bank will also begin 4 months from today and end 48 months from today. If you finance with the car dealer, all payments will be equally sized Determine the fair present value of the value of the subsidy that is being offered by the car dealer. Enter your answer as a positive value with at least 4 significant digits
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