Question 1200900: Paula is considering the purchase of a new car. She has narrowed her search to two cars that are equally appealing to her. Car A costs $22,000, and Car B costs $22,500. The manufacturer of Car A is offering 0% financing for 48 months with zero down, while the manufacturer of Car B is offering a rebate of $2000 at the time of purchase plus financing at the rate of 3%/year compounded monthly over 48 months with zero down. If Paula has decided to buy the car with the lower net cost to her, which car should she purchase? (Round numerical values to the nearest cent.)
net cost of Car A?
net cost of Car B?.
car she should purchase?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! A will cost 22,000 up front or 458.33 per month for 48 months.
B will cost 20,500 up front or 453.75 per month for 48 months.
if she can pay up front, she should go with B.
if she can't pay up front, she should also go with B.
sounds like B is the winner either way, although it would be a bigger winner if she could pay up front.
if she can pay up front, she saves 1500 by choosing B.
if she pays on time, her total payments to B would be equal to 48 * (458.33 minus 453.75) = 218.84 less than payments to A.
that's what i get.
payment analysis was done using the financial calculator at https://arachnoid.com/finance/
results of the analysis using that calculator are shown below.
in the first analysis, the present value is 22000 and the interest rate is 0% per moneh.
in the second analysis, the present value is 20500 and interest rate is 3%/12 = .25% per month.
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