You are offered two options by the Waverley Toyata dealer for purchasing a Toyota landcruiser 4WD

Option 1: upfront where you pay $100,000 now
Option 2: 2-year monthly payment plan of $4500/month, starting today, with a final payment to be made 23 months from today

1) Assume that you have chosen option 2 to purchase the car. Immediately after the 12th monthly payment, you encounter some temporary financial difficulty and are only able to afford monthly payment of $4000. After negotiating with the dealer, they are happy for you to pay $4000 per month for the rest of the contract and a final lump sum payment right at the end of the contract. if the market interest rates rate is still 6% p.a., how much would this final lump sum payment be so that you will not be worse off by this new arrangement?

Answer rating: 100% (QA)

SOLUTION To calculate the final lump sum payment under the new arrangement we need to find the prese... View the full answer