Rich buys a car for $26,000 and has two options for financing. The dealership offers either...

 

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Rich buys a car for $26,000 and has two options for financing. The dealership offers either financing of 0% compounded monthly for 5-years, or a $5,000 cash rebate. If Rich takes the rebate, then he will apply the rebate to the cost of the car and finance the remaining balance with a loan for 5-years at 2.95% compounded monthly through the Tiger's Credit Union. (a) What would Rich's monthly payment be if he takes the 5-year 0% financing? Monthly payment for 5-year 0% financing = (Note: Your answer should include a dollar sign and be accurate to two decimal places) (b) What would Rich's monthly payment be if he takes the $5,000 rebate? Monthly payment with $5,000 rebate == (Note: Your answer should include a dollar sign and be accurate to two decimal places) (c) Which of the two options is financially better for Rich? Enter either "1" (for Option 1) if the 0% financing is better or enter "2" (for Option 2) if the $5,000 rebate is better. (Do not include the quotation marks in your answer.) Best Option is Option Rich buys a car for $26,000 and has two options for financing. The dealership offers either financing of 0% compounded monthly for 5-years, or a $5,000 cash rebate. If Rich takes the rebate, then he will apply the rebate to the cost of the car and finance the remaining balance with a loan for 5-years at 2.95% compounded monthly through the Tiger's Credit Union. (a) What would Rich's monthly payment be if he takes the 5-year 0% financing? Monthly payment for 5-year 0% financing = (Note: Your answer should include a dollar sign and be accurate to two decimal places) (b) What would Rich's monthly payment be if he takes the $5,000 rebate? Monthly payment with $5,000 rebate == (Note: Your answer should include a dollar sign and be accurate to two decimal places) (c) Which of the two options is financially better for Rich? Enter either "1" (for Option 1) if the 0% financing is better or enter "2" (for Option 2) if the $5,000 rebate is better. (Do not include the quotation marks in your answer.) Best Option is Option

Answer rating: 100% (QA)

a To calculate the monthly payment for the 5year 0 financing we need to divide the total cost of the ... View the full answer