Suppose that you have decided you require a new car, however not any car will do; you have decided to purchase the car of your dreams. Conduct some research as to the cost of this car. You have found out in this imagined scenario which you could afford to make a 10% down payment. You can borrow the balance either from your local bank by using a four-year loan or from the dealership's finance company. If you purchase from your dealership's finance company, the APR will be 10% with your 10% down and monthly payments over three years. Though, the dealership will give you a rebate of 5% of the car price after the three year term is complete. You want the best deal possible, so you consider the given questions:
a) What kind of car have you selected, and what will it cost?
b) What is the interest rate from your local bank for a car loan for four years?
c) What will your payment be to your local bank, supposing your 10% down payment? Be sure to use the formula and show your work. How much will that car have cost in 4-years?
d) What will your payment be to the dealership finance company supposing your 10% down payment? Be sure to use the formula and show your work. How much will that car have cost in 3 years?
e) Which is the better deal and explain why?