1. The "one-time good deal" Cash-For-Clunkers program offered by the federal government proved a temporary boon for car dealers. In addition to this program, dealers were eager to add their own incentives. Bill Mitselfik was considering two different deals he could make for his new car. He can finance the purchase price, $25,000, entirely through the dealer at a 2% APR (compounded annually) for 5 years. 
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3. Alternatively, the dealer will give Bill a cash rebate and provide financing at 9% APR (compounded annually) for 5 years. What is the value of the rebate for which Bill would be indifferent between the two financing options? If the rebate is $5,000 is that a good deal.

Answer rating: 100% (QA)

Comparing Financing Options for Bills New Car Option 1 Dealer Financing at 2 APR Loan amount 25000 A... View the full answer