An auto dealership is advertising that a new car with a sticker price of $33,768 is...

An auto dealership is advertising that a new car with a sticker price of $33,768 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 $469. Note that 72 payments × $469 per payment = $33,768, 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.)

Enter your answer as a percentage. If required, round your answer to one decimal digit.
%

Please show how to solve using excel, thanks.

Expert Solution

orchestra answered 2 years ago

An auto dealership is advertising that a new car with a sticker price of $34,128 is...

An auto dealership is advertising that a new car with a sticker price of $34,128 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 $474. Note that 72 payments × $474 per payment = $34,128, 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...

You are considering buying a new car. The sticker price is $85,000 and you have $25,000...

You are considering buying a new car. The sticker price is $85,000 and you have $25,000 to put toward a down payment. If you can negotiate a nominal annual interest rate of 6.5 percent and you wish to pay for the car over a 5 year period, what are your monthly car payments? DO NOT USE EXCEL

A car has a sticker price of $94,000.The car has a 100 hp engine and can...

A car has a sticker price of $94,000.The car has a 100 hp engine and can accelerate from 0 to 60 mph in 15.8 seconds. The lease rate is 3.7%. The term of the lease is three years. The buyout is $45,120 at the end of the lease. Assume that the lease has three annual payments with the first payment due on signing. a) What are the before-tax lease payments assuming no down payment? b) With leases, sales tax is...

An advertising agency developed a radio commercial to promote a car dealership. In this commercial the...

An advertising agency developed a radio commercial to promote a car dealership. In this commercial the spokesperson asks, "is your car getting long in the tooth?" Most listeners had no idea what this question was asking. With reference to the communication process identified in Figure 16-1 (p.429), explain why this message was not understood.

You are considering purchasing a car with a sticker price of $36,270 (nonnegotiable with no down...

You are considering purchasing a car with a sticker price of $36,270 (nonnegotiable with no down payment required). You wish to make monthly payments for six years and the most you can afford to pay is $600 a month. Your local bank/credit union has agreed to loan you the money at a 4.39% annual interest rate. Create an amortization table reporting the beginning/ending loan balance, total payment, and portion of payment going to interest and principal. Create a IF statement...

A car dealership offers you no money down on a new car. You may pay for...

A car dealership offers you no money down on a new car. You may pay for the car for 5 years by equal monthly end-of-the-month payments of $407 each, with the first payment to be made one month from today. If the discount annual rate is 4.52 percent compounded monthly, what is the present value of the car payments? Round the answer to two decimal places.

An auto dealership is attempting to determine the preferences of its customers. The dealership has employed...

An auto dealership is attempting to determine the preferences of its customers. The dealership has employed your marketing research firm to determine the specific features of automobiles most desired by prospective customers. Discuss how you will construct a scale to achieve that objective.

William and Mary bought a new Chevy Corvette with a sticker price of $55,000 including tax,...

William and Mary bought a new Chevy Corvette with a sticker price of $55,000 including tax, title and license. Suppose that William and Mary agree to put down 20 percent and make 60 monthly payments of $838.42. How long will it actually take to pay off the car if William and Mary make monthly payments of $1,152.08 instead of her minimum monthly payment? Assume monthly compounding. 2.50 Years 3.00 Years 3.50 Years 4.00 Years None of the Above

You have been hired by a used-car dealership to modify the price of cars that are...

You have been hired by a used-car dealership to modify the price of cars that are up for sale. You will get the information about a car, and then change its price tag depending on a number of factors. Write a program (a script named: 'used_cars.m' and a function named 'car_adjust.m').The script passes the file name 'cars.dat' to the function. The following information is stored inside the file: Ford, 2010 with 40,000 miles and no accident at marked price of...

Calvin borrows $20,000 from a car dealership to purchase a vehicle. The car dealership charges 12%...

Calvin borrows $20,000 from a car dealership to purchase a vehicle. The car dealership charges 12% interest, compounded monthly. Calvin is expected to pay off the loan principal and all interest charged with equal monthly payments over a 3-year period. a. What will Calvin’s monthly payment need to be? (4 points) b. With the first monthly payment, how much of this payment will be “interest”, and how much of this payment will be “principal”? (4 points) c. Once the loan...

Question