Assume the car can be purchased for 0% down for 60 months (in lieu of rebate).

Question

A car with a sticker price of $42,100 with factory and dealer rebates of $5,100
(a) Find the monthly payment if financed for 60 months at 0% APR. (Round your answer to the nearest cent.)
$ 1

(b) Find the monthly payment if financed at 2.5% add-on interest for 60 months. (Round your answer to the nearest cent.)
$ 2

(c) Use the APR approximation formula to find the APR for part (b). (Round your answer to one decimal place.)
3 %

(d) State whether the 0% APR or the 2.5% add-on rate should be preferred.
0% APR
2.5% add-on rate
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