1) You are trying to decide whether to keep your current car or buy a new car. If you keep your current car you will pay $400 per month (starting next month) on average for maintenance, gas, property tax and insurance. You will make these payments for 5 years. Alternatively, you can buy a new car and pay $45,000 today and $100 per month (starting next month) on average for maintenance, gas, property tax and insurance. You will make these payments for for 5 years. If your investments earn 7% APR (compounded monthly), which alternative is cheaper in present value terms and by how much?

Group of answer choices

keep existing car saves $31,342

keep existing car saves $29,849

keep existing car saves $28,980

get new car, saves $31,425