You Plan to Purchase a New Car with a Retail

question 9

Multiple Choice

You plan to purchase a new car with a retail price of $26,499 after your trade-in and astute negotiations with the dealership sales manager.You have agreed to make 5 ANNUAL payments with an annual interest rate of 3.90%.How large are your equal annual end-of-the-year payments for your new car?

• A)$5299.80
• B)$5,462.21
• C)$5,841.89
• D)$5,935.68

---

Definitions:

After-Tax Net Income

The amount of profit a company remains with after all tax expenses have been deducted from its total income.

Accounting Rate of Return

A financial metric used to assess the profitability of an investment, calculated as the average annual return over the investment's life divided by the initial investment cost.

Straight-Line Depreciation

An arrangement for apportioning the financial burden of a physical investment throughout its active life in equal yearly disbursements.

Accounting Rate of Return

A financial ratio used to measure the profitability of an investment, calculated as the average annual profit divided by the initial investment cost.