Find monthly payment for both incentives. -Incentives A is a $5000 off the price

Question

Find monthly payment for both incentives.
-Incentives A is a $5000 off the price of the car, followed by a five-year loan at 7.38%
-incentive B. does not have a cash rebate but provides free financing (no interest) over five years. which is a better incentive deal?

nis lest: 28 pts Time Remaining: 01:26:28 15 of 28 complete 10 tT Round to the nearest dollar 1-1+ Suppose that you are buyng a car for $60,000 including tazes and license fees You saved $20,000 for a down payment The dealer is offering you two ncentives Incentive As a $5000 off the price of the car, followed by a five-year loan at 738%. Incentive B does not have a cash rebate, but provides free financing (no interest) over five years What is the difference in monthly payments between the two offers? Which incentive is the better deal? OA approximately $32, Incentive B is the better deal OB, approximately 368, Incentive A is the better deal. Oc. approximately $84, Incentive B is the better deal OD. approzimately $16, Incentive A is the better deal Click to select your answer Previous Question Next Question Submit Test

Explanation / Answer

Answer:

Amount of loan required when there is cash rebate = $ 60,000 - $ 5,000 - $ 20,000 = $ 35,000 and;

Monthly payment = $ 35,000 x (0.0738 / 60) / [ 1 - {1 + (0.0738 / 60)}-60] = $ 699 per month

Amount of loan required when no cash rebate is there = $ 60,000 - $ 20,000 = $ 40,000 and;

Monthly payment = $ 40,000 / 12 x 5 = $ 666.67 per month (being interest free financing)

Difference in monthly payments is $ 699 - $ 666.67 = $ 32.33

Therefore, the correct answer is Option A. approximately $ 32, and incentive B is a better deal.

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.