A car dealer carries out the following calculations. List price $ 5,368.00 Options $ 1,625.00 Destination charges $ 200.00 Subtotal $ 7,193.00 Tax $ 431.58 Less trade-in $ 2,932.00 Amount to be financed $ 4,692.58 6% interest for 48 months $ 1,126.22 Total $ 5,818.80 MONTHLY PAYMENT $ 121.22 What is the annual percentage rate? (Round your answer to one decimal place.) %
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To travel to his new job, Hassan is shopping for a new vehicle, and has noticed that many vehicle manufacturers are offering special deals to sell off the current year's vehicles before the models arrive. Hassan's local Ford dealership is advertising 3.9% financing for a full 48 months (i.e., 3.9% compounded monthly) or up to $4000 cash back on selected vehicles. The vehicle that Hassan wants to purchase costs $24,600 including taxes, delivery, licence, and dealer preparation. This vehicle qualifies for $1800 cash back if Hassan pays cash for the vehicle. Hassan has a good credit rating and knows that he could arrange a vehicle loan at his bank for the full price of any vehicle he chooses. His other option is to take the dealer financing offered at 3.9% for 48 months. Hassan wants to know which option requires the lower monthly payment. Question - Suppose Hassan buys the vehicle on July 1. What monthly payment must Hassan make if he chooses the dealer's 3.9% financing option and pays off the loan over 48 months? (Assume he makes each monthly payment at the end of the month and his first payment is due on July 31.)
Madhur L.
use link for table: https://ezt.prod.mheducation.com/Media/Connect_Production/bne/slater_14e/AnnualPercentageRate.pdf
Jenny W.
New Car In Spring 2010 , some dealers offered a cash-back allowance of $\$ 2250$ or 0.9$\%$ financing for 36 months on an Acura TL. Source: cars.com. a. Determine the payments on an Acura TL if a buyer chooses the 0.9$\%$ financing option and needs to finance $\$ 30,000$ for 36 months, compounded monthly. Find the total amount the buyer will pay for this option. b. Determine the payments on an Acura TL if a buyer chooses the cash-back option and now needs to finance only $\$ 27,750$ . At the time, it was possible to get a new car loan at 6.33$\%$ for 48 months, compounded monthly. Find the total amount the buyer will pay for this option. c. Discuss which deal is best and why.
Mathematics of Finance
Present Value of an Annuity; Amortization
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