A major car manufacturer is developing a promotion offering new car buyers the choice between “below market” four-year financing at 1.9% compounded monthly or a cash rebate. On the purchase of a $25,000 car, what cash rebate would make a car buyer indifferent between the following alternatives?
• Financing through the card eager at the reduced interest rate.
• Takingthecashrebateandobtainingbankfinancingat6.6%compoundedmonthly for the net “cash” price.