The local motorcycle dealership has a sale to clear out its inventory from last year’s models. The dealership has two options for you: 

• Option 1: $35,000 (price) with 0% interest financing for six years, with equal monthly payments at the beginning of the month. At the end of six years you fully pay off the motorcycle. This option is only available if you finance the purchase through the dealership. 

• Option 2: $3,500 cash back if you pay for the motorcycle fully upfront immediately. Suppose you are looking for a bank loan to take advantage of option 2 and want the loan to be six years long with beginning of month payments. What is the monthly interest rate that will make options 1 and 2 equal?

Answer rating: 100% (QA)

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