purchase plans are available for a new car. 5,000 cash immediately ,500 down and 36 monthly payments of $116.25 1,000 down and 48 monthly payments of $120.50 expects to keep the car 5 years and her minimum at

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter5: Making Automobile And Housing Decisions
Section: Chapter Questions
Problem 8FPE
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5.
Three purchase plans are available for a new car.
Plan A: $5,000 cash immediately
Plan B: $1,500 down and 36 monthly payments of $116.25
Plan C: $1,000 down and 48 monthly payments of $120.50
If a customer expects to keep the car 5 years and her minimum attractive rate of
return (MARR) is 18% compounded monthly, which payment plan should she
choose?
Transcribed Image Text:5. Three purchase plans are available for a new car. Plan A: $5,000 cash immediately Plan B: $1,500 down and 36 monthly payments of $116.25 Plan C: $1,000 down and 48 monthly payments of $120.50 If a customer expects to keep the car 5 years and her minimum attractive rate of return (MARR) is 18% compounded monthly, which payment plan should she choose?
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