Compute pv of difference between two alternatives

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You can purchase a car for $15,000. The dealer offers you the choice between $2,500 dollars cash back or a promotional 2.0% annual rate on a loan. The loan is a five year loan with monthly payments. Your bank will also loan you money at the market rate of 9.6% annual rate. This loan also requires monthly repayments. Which is a better deal? Both rates are quoted as APR based on monthly compounding. Be sure to compute the PV of the difference between the two alternatives.

Reference no: EM133071732

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