You can buy a car that is advertised for $20,520 on the following terms: (a) pay $20,520 and receive a $5,520 rebate from the manufacturer; (b) pay $570 a month for 3 years for total payments of $20,520, implying zero percent financing. Calculate the present value of the payments for option (a) if the interest rate is 1.25% per month. Calculate the present value of the payments for option (b) if the interest rate is 1.25% per month. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Which is the better deal?
You can buy a car that is advertised for $20,520 on the following terms: (a) pay $20,520 and receive a $5,520 rebate from the manufacturer; (b) pay $570 a month for 3 years for total payments of $20,520, implying zero percent financing. Calculate the present value of the payments for option (a) if the interest rate is 1.25% per month. Calculate the present value of the payments for option (b) if the interest rate is 1.25% per month. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Which is the better deal?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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USE THE PV FUNCTION IN EXCEL !!!!
You can buy a car that is advertised for $20,520 on the following terms: (a) pay $20,520 and receive a $5,520 rebate from the manufacturer; (b) pay $570 a month for 3 years for total payments of $20,520, implying zero percent financing. Calculate the present value of the payments for option
(a) if the interest rate is 1.25% per month. Calculate the present value of the payments for option
(b) if the interest rate is 1.25% per month. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Which is the better deal?
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