You are visiting a car dealer and falling in love with a sport car that comes with all the latest features powered by artificial intelligence. To finance the car purchase, the salesman offers the following payment plan over 7 years:

Down Payment Now: $4,000

Monthly Payments for 6 years (Year 1 to 6): $650 per month

Monthly Payments for Year 7: $500 per month

(a) If the price of car is $47,000, what would be the monthly interest rate charged by the dealer if you pay down payment?

(b) If you do not want to pay down payment now, the dealer offers you to pay $700 per month for 7 years. Would you rather choose this non down payment option in (b) compared to (a)? Why?