Business, 30.10.2019 05:31 ltawiah8393

An auto dealership is advertising that a new car with a sticker price of $35,208 is on sale for $25,995 if payment is made in full, or it can be financed at 0% interest for 72 months with a monthly payment of $489. note that 72 payments × $489 per payment = $35,208, which is the sticker price of the car. by allowing you to pay for the car in a series of payments (starting one month from now) rather than $25,995 now, the dealer is effectively loaning you $25,995. if you choose the 0% financing option, what is the effective interest rate that the auto dealership is earning on your loan? (hint: discount the payments back to current dollars, and use goal seek to find the discount rate that makes the net present value of the payments = $25,995.)

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An auto dealership is advertising that a new car with a sticker price of $35,208 is on sale for $25,...

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