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You have decided to buy a used car. The dealer has offered you two options: (FV of $1, PV of $1, FVA of $1, and
You have decided to buy a used car. The dealer has offered you two options: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)
a) Pay $670 per month for 30 months and an additional $10,000 at the end of 30 months. The dealer is charging an annual interest rate of 24%.
b) Make a one-time payment of $20,527, due when you purchase the car.
1-a. Determine how much cash the dealer would charge in option (a).
1-b. In present value terms, which offer is clearly a better deal?
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