You are in the process of purchasing a new automobile that will cost you $25,000. You have two options for financing. The dealership is offering you either a $1000 rebate (applied toward the purchase price if paid in cash right away) or 3.9% financing for 60 months (with payments made at the end of the month). Alternatively, you have been pre-approved for an auto loan through your local credit union at an interest rate of 7.5% for 60 months. The goal of this question is to find out if you should (A) forgo the rebate and finance through the dealership at the lower 3.9% APR, or (B) take the $1000 rebate and finance through your credit union or ?

1) To evaluate option (A), first what is the monthly interest rate in percentage that the dealership is charging?

2) Given the monthly interest rate you calculated, what is the monthly payment for option (A)? Round your answer to two decimal places

3) Now, to evaluate option (B), what is the monthly interest rate in percentage that your credit union is charging you?

4) Now, given the interest rate calculated above, what is the monthly payment for option (B)? Round your answer to two decimal places.

5)Based on your findings, which option do you prefer?

a) Go with the dealership financing and forgo the rebate.

b) Go with the rebate and finance it thorough your credit union.