Question

​Ford's current incentives for customers looking to buy a Mustang include either financing at an APR of 5.1 percent compounded monthly for 48 months or $ 1,300 cash back.​ Let's assume Suzie Student wants to buy the premium Mustang​ convertible, which costs $ 26 comma 000​, and she has no down payment other than the cash back from Ford. If she chooses the ​$1,300 cash​ back, Suzie can borrow from the VTech Credit Union at an APR of 7.1 percent compounded monthly for 48 months. What will Suzie​ Student's monthly payment be under each​ option? Which option should she​ choose?

a. If Suzie chooses 5.1 percent financing for 48 months to buy the premium Mustang​ convertible, which costs ​$26,000​, what will her monthly payment​ be? ​$ ​(Round to the nearest​ cent.)

b. If Suzie chooses ​$1 comma 300 cash back to buy the premium Mustang convertible and borrow ​$24,700 fom the VTech Credit Union at an APR of 7.1 percent compounded monthly for 48 ​months, what will her monthly payment​ be? ​$ ​(Round to the nearest​ cent.)

c. Which option should Suzie Student​ choose?  ​(Select the best​ choice.)

A. Choose low interest rate financing because the monthly payment under this option is lower.

B. Choose cash back financing because the monthly payment under this option is lower

Answer 1

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