You can buy a car that is advertised for $16,560 on the following terms: (a) pay $16,560 and receive a $2,560 rebate from the manufacturer; (b) pay $460 a month for 3 years for total payments of $16,560, implying zero percent financing.
a. Calculate the present value of the payments for option (a), if the interest rate is .75% per month.
b. Calculate the present value of the payments for option (b), if the interest rate is .75% per month.