Question

A car dealership can offer a $36,000 car under a special promotion with four years financing at 0%, or can offer a discount off the price of the vehicle if the buyer finances the sale at 0.5% monthly over the four years. What discount off the purchase price results in the buyer making the identical monthly payment under either purchase option

Answer 1

$4,064.76

Step-by-step explanation:

According to the scenario, computation of the given data are as follows,

If car financing at 0%, then

Car price = $36,000

Time period = 48 months

So, Monthly payment = $36,000 ÷ 48 = $750

If financing at regular rate then,

Monthly interest rate = 0.5%

Time period = 48 months

Monthly payment , if we consider the same payment = $750

By using excel formula, [=PV(BY8,BY9,-BY10)]

Discount = $4,064.76