You are looking to buy a 2018 Ford Focus Titanium Hatchback with sunroof and leather seats at a price of $26,000. Being a college student, you have cash to pay taxes, title, license and fees but your parents offer to give you 10% of the price, $2,600, as a down payment and you need to finance the remainder of $23,400. You smartly researched your finance options and got preapproval at a 3.6% APR with monthly compounding for 5 years on your own so you are not at the mercy of depending on financing from the car dealership. Ford is offering 0% APR financing or $3,250 cash back which would be used as an additional down payment that reduces the amount that you would need to finance. You would use your 3.6% APR pre-approved financing if you elect the $3,250 cash back option. Answer the following questions.

1. What would be your monthly car loan payment under the Fords 0% APR financing offer (assume a 60-month loan term)?

2. What would be your monthly car loan payment under the Fords $3,250 cash back offer and your 3.6% APR pre-approved financing?

3. At what APR would you be indifferent between the two offers? In other words, at what APR would you have the same monthly payment (assuming a 60-month loan term) for the $3,250 cash back offer as you would with the 0% APR financing offer?

4. Assume you go with the offer in question #2. Construct an amortization schedule for the loan for all 60 monthly payments. What is your loan balance after 36 months?

5. Now assume you were willing to make a monthly car loan payment of $450. Re-do your amortization schedule from question #4 with this monthly payment. How long will it take to pay off the loan with the $450 monthly payment?