The salesperson offers,"Buy this new car for $25,000 cash or,with an appropriate down payment,pay $500 per month for 48 months at 8% interest." Assuming that the salesperson does not offer a free lunch,calculate the "appropriate" down payment.

Question

Quizplus · Accepted Answer

PV = $500 × {[1 / (0.08 / 12)] − [1/(0.08 / 12)(1 + (0.08 / 12)⁴⁸)]}PV = $20,480.96Down payment = $25,000 − 20,480.96 = $4,519.04

The Salesperson Offers,"Buy This New Car for $25,000 Cash Or,with