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Contemporary Engineering Economics 6th Edition by Chan Park
Edition 6ISBN: 978-0134105598Contemporary Engineering Economics 6th Edition by Chan Park
Edition 6ISBN: 978-0134105598 Exercise 17
Consider the following two options for financing a car:
• Option A. Purchase the vehicle at the normal price of $26,200 and pay for the vehicle over three years with equal monthly payments at 0% APR financing.
• Option B. Purchase the vehicle for a discount price of $24,048 to be paid immediately. The funds that would be used to purchase the vehicle are presently earning 5% annual interest compounded monthly.
(a) What is the meaning of the APR of 0% quoted by the dealer
(b) Under what circumstances would you prefer to go with the dealer's financing
(c) Which interest rate (the dealer's interest rate or the savings rate) would you use in comparing the two options
• Option A. Purchase the vehicle at the normal price of $26,200 and pay for the vehicle over three years with equal monthly payments at 0% APR financing.
• Option B. Purchase the vehicle for a discount price of $24,048 to be paid immediately. The funds that would be used to purchase the vehicle are presently earning 5% annual interest compounded monthly.
(a) What is the meaning of the APR of 0% quoted by the dealer
(b) Under what circumstances would you prefer to go with the dealer's financing
(c) Which interest rate (the dealer's interest rate or the savings rate) would you use in comparing the two options
Explanation
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Verified
The term annual pay rate (APR) is freque...
Contemporary Engineering Economics 6th Edition by Chan Park
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