You want to buy a Honda Civic. The MSRP is $26,185. Honda offers a purchase financing plan with no money down and 48 end-of-month payments of $550. Should you buy the car for cash or take Honda's purchase financing? You have the cash and you could invest it and earn at least 4%.

Question content area bottom Part 1

What is the present value of all the payments? (Round to the nearest cent.)

Which of the following statements is true?(Choose the best response.)

A. You should borrow money to buy the car because its present value is lower.

B. You should pay cash to buy the car because its present value is lower.

C. You should pay cash to buy the car because its present value is higher.

D. You should borrow money to buy the car because its present value is higher.