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 an you could invest it and earn at least 4%.

What is the present value of all the payments?

Which of the following statements is true?

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

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

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

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