You have your heart set on purchasing a new Alpha Romeo Stelvio Ti Sport AWD. The MSRP is $53,290.

The Finance Department offers you financing over a 8 year period with an annual discount rate of 6.25%.

The monthly payment will be $700.

They claim you are being given a discount on the car.

Remember to convert the monthly payments into annual payments.

You can use the annuity model to quickly solve for the value.

You can also use the single payment method if you like.

Are they telling you the truth about selling the Alpha to you at a discount?

	a.	Yes, the present value of the future payments is approximately $51,650 which results in a discount of approximately $1,640.
	b.	No, the present value of the future payments is approximately $53,290 which results in no discount.
	c.	No, no matter what numbers they quote me, they will never give me a discount off the MSRP
	d.	Yes, but it has nothing to do with the time-value-of-money.