Chad is considering buying a new car for $37,000. If he purchase the car he will pay $7,000 of the purchase price as a down payment. Below are two options to choose from.
Option 1: Pay off the amount borrowed to purchase the car with a 5 year loan, and the annual percentage rate (APR) will be 0%.
Option 2: Receive a $2,000 instant rebate. This will lower your loan amount. Pay off the amount borrowed to purchase the car with a 5 year loan, and the annual percentage rate (APR) will be 3.9%.
(A) Which option should you choose? Why?
(B) How much should the rebate be in order to make the two options equal?
Use Excel functions to claculate.