Use the Information for the Question(s)below

question 57

Multiple Choice

Use the information for the question(s) below.
You are in the process of purchasing a new automobile that will cost you $27,500.The dealership is offering you either a $2500 rebate (applied toward the purchase price) or 1.9% financing for 48 months (with payments made at the end of the month) .You have been pre-approved for an auto loan through your local credit union at an interest rate of 6.5% for 48 months.
-If you take the $2500 rebate and finance your new car through your credit union your monthly payments will be closest to:

• A)$520.
• B)$573.
• C)$593.
• D)$799.

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Definitions:

Compound Interest

Calculating interest by considering the base amount of a deposit or loan and adding the interest accrued across preceding periods.

Capital Investment

involves the procurement of funds or physical assets with the anticipation of generating future returns or growth in value.

Net Cash Flows

The difference between a company’s total cash inflows and outflows over a specific period, indicating its ability to generate cash.

Residual Value

Residual value is the estimated amount that an asset will be worth at the end of its useful life.