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Posted on Oct 06, 2024

You can buy a car that is advertised for $21,600 on the following terms: (a) pay $21,600 and receive a $4,600 rebate from the manufacturer;

You can buy a car that is advertised for $21,600 on the following terms: (a) pay $21,600 and receive a $4,600 rebate from the manufacturer; (b) pay $450 a month for 4 years for total payments of $21,600, implying zero percent financing.

a. Calculate the present value of the payments for option (a) if the interest rate is 1.00% per month.

b. Calculate the present value of the payments for option (b) if the interest rate is 1.00% per month.

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