Rich buys a car for $34,000 and has two options for financing. The dealership offers either financing of 0% compounded monthly for 5-years, or a $5,000 cash rebate. If Rich takes the rebate, then he will apply the rebate to the cost of the car and finance the remaining balance with a loan for 5-years at 2.5% compounded monthly through the Tiger's Credit Union. (a) What would Rich's monthly payment be if he takes the 5-year 0% financing? Monthly payment for 5-year 0% financing= (Note: Your answer should include a dollar sign and be accurate to two decimal places) (b) What would Rich's monthly payment be if he takes the $5,000 rebate? Monthly payment with $5,000 rebate= (Note: Your answer should include a dollar sign and be accurate to two decimal places) (c) Which of the two options is financially better for Rich? Enter either "1" (for Option 1) if the 0% financing is better or enter "2" (for Option 2) if the $5,000 rebate is better. (Do not include the quotation marks in your answer.) Best Option is Option
Rich buys a car for $34,000 and has two options for financing. The dealership offers either financing of 0% compounded monthly for 5-years, or a $5,000 cash rebate. If Rich takes the rebate, then he will apply the rebate to the cost of the car and finance the remaining balance with a loan for 5-years at 2.5% compounded monthly through the Tiger's Credit Union. (a) What would Rich's monthly payment be if he takes the 5-year 0% financing? Monthly payment for 5-year 0% financing= (Note: Your answer should include a dollar sign and be accurate to two decimal places) (b) What would Rich's monthly payment be if he takes the $5,000 rebate? Monthly payment with $5,000 rebate= (Note: Your answer should include a dollar sign and be accurate to two decimal places) (c) Which of the two options is financially better for Rich? Enter either "1" (for Option 1) if the 0% financing is better or enter "2" (for Option 2) if the $5,000 rebate is better. (Do not include the quotation marks in your answer.) Best Option is Option
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Rich buys a car for $34,000 and has two options for financing. The dealership offers either financing of 0 % compounded monthly for 5-years, or a $5,000
cash rebate. If Rich takes the rebate, then he will apply the rebate to the cost of the car and finance the remaining balance with a loan for 5-years at 2.5%
compounded monthly through the Tiger's Credit Union.
(a) What would Rich's monthly payment be if he takes the 5-year 0% financing?
Monthly payment for 5-year 0% financing=
(Note: Your answer should include a dollar sign and be accurate to two decimal places)
(b) What would Rich's monthly payment be if he takes the $5,000 rebate?
Monthly payment with $5,000 rebate =
(Note: Your answer should include a dollar sign and be accurate to two decimal places)
(c) Which of the two options is financially better for Rich? Enter either "1" (for Option 1) if the 0% financing is better or enter "2" (for Option 2) if the $5,000 rebate is
better. (Do not include the quotation marks in your answer.)
Best Option is Option](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa5c4b825-abee-4d48-a1ff-d39d6e88a9e0%2F023ecc03-b0af-421e-85a0-5f6da94defc1%2Fkrv323_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Rich buys a car for $34,000 and has two options for financing. The dealership offers either financing of 0 % compounded monthly for 5-years, or a $5,000
cash rebate. If Rich takes the rebate, then he will apply the rebate to the cost of the car and finance the remaining balance with a loan for 5-years at 2.5%
compounded monthly through the Tiger's Credit Union.
(a) What would Rich's monthly payment be if he takes the 5-year 0% financing?
Monthly payment for 5-year 0% financing=
(Note: Your answer should include a dollar sign and be accurate to two decimal places)
(b) What would Rich's monthly payment be if he takes the $5,000 rebate?
Monthly payment with $5,000 rebate =
(Note: Your answer should include a dollar sign and be accurate to two decimal places)
(c) Which of the two options is financially better for Rich? Enter either "1" (for Option 1) if the 0% financing is better or enter "2" (for Option 2) if the $5,000 rebate is
better. (Do not include the quotation marks in your answer.)
Best Option is Option
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