Assume you will purchase a new car. The dealer is currently offering a special promotion: you can choose A) a $1500 rebate up front with 6% financing OR B) 0% financing for the first 36 months and 6% financing for the last 2 years. Both loans are for 5 years.

Find the car you want to purchase and its cost and where you can purchase it from. (Do this online or at a dealership)

For promotion A

• Compute the cost of the car after the rebate
• Compute your monthly payment at the 6% interest.
• Compute the final amount you paid (including interest)
• Subtract the price of the car from the amount you paid to get the amount of the interest you paid.

For promotion B

• Since 3 years is 3/5 of the loan, take 3/5 the price and compute the monthly payment (this amount divided by 36 since there is no interest).
• Take the remaining 2/5 of the loan and compute the monthly payment at the 6% interest for the remaining 2 years. Multiply the monthly payment by 24 to get the total amount spent
• Add the 36 monthly payments from years 1-3 to the 24 monthly payments from years 4-5
• Compute the final amount you paid (including interest)
• Subtract the price of the car from the total amount you paid to get the amount of the interest you paid.

Conclusion

• Compare the final amount you paid from promotion A and from promotion B and which was the better buy. Show clear calculations I can follow for your turned-in work.
• Report out (typed when possible) the calculations with your conclusions.

Answer rating: 100% (QA)

To compare the two promotions A and B for purchasing a new car we will make the following assumptions The price of the car before any rebates or finan... View the full answer