A light-duty pickup truck has a manufacturer\'s suggested retail price (MSRP) of

Question

A light-duty pickup truck has a manufacturer's suggested retail price (MSRP) of$14,000 on its window. After haggling with the salesperson for several days, the prospective buyer is offered the following deal: "You pay a $1,330 down payment now and $245 each month thereafter for 37 months and the truck will be yours." The APR at this dealership is 2.3% compounded monthly. How good a deal is this relative to the MSRP? The difference of the offer is S or against the M (Round the first answer to the nearest dollar. Round the second answer to two decimal places.) L,

Explanation / Answer

MSRP of the Light duty Pick up truck = $ 14,000

Offered deal is :

Down patment = $ 1,330

Installments= US4 245 for 37 months

So total payment as per the deal = $ 1,330 + (245*37)

= $ 1330+ $ 9065

= $10,395

Since the total payment is less then MSRP so the deal is not good .

The difference of the offer is 14000-10395= US$ 3,605 or 25%

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