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____
1 month ago
13

She has negotiated a sales price of $24,145 and she has a $4,000 down payment. She is eligible for the full $750 cash rebate. He

r bank has pre-approved her for a 48 month car loan at 3.50%. Assuming Zara wants the cheapest overall price, which option should she take? Should she take the 1.9% financing offer for 66 months from the dealer, or should she borrow the money from her bank at 3.50% to pay off the dealer and receive the $750 cash rebate?
Business
1 answer:
Scilla [3.8K]1 month ago
7 0
The most favorable overall price is the bank deal since it entails less cash outflow. Zara aims for the cheapest total price, focusing on minimizing cash payments regardless of the interest rates. To evaluate the dealer's offer, we need to calculate the payment for a 66-month annuity at a rate of 1.9%, factoring a present value of $24,145 minus the $4,000 down payment, equating to $20,145. The dealer's monthly payment equates to approximately $321.69, which totals $21,231.54 in cash. In contrast, the bank's rate for a 48-month loan at 3.50%, utilizing the cash rebate, brings the initial value down to $19,395, resulting in a monthly payment of $431.01, culminating in an overall cash expenditure of $20,688.48.
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