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You have decided to buy a used car. The dealer has offered you two options: a) Pay $480 per month for 20 months and an
You have decided to buy a used car. The dealer has offered you two options:
a) Pay $480 per month for 20 months and an additional $13,000 at the end of the 20 months. The dealer is charging 12 percent per annum.
b) When you buy the car, pay cash equal to the present value of the payments in option (a).
Determine how much the cash dealer would charge in option (b).
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