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Ginger wants to buy a new Lexus. The car she wants has a Manufacturer’s Suggested Retail Price of $45,000. The dealer has offered to sell Ginger the car for $44,000. The dealer has also offered four years of financing with an interest rate of only 1%!! The complete deal is that Ginger puts down $4,000 then makes annual interest payments of 1%. At the end of the fourth year she also pays the $40,000. Ginger called the bank and they told her that a car loan like this would normally have an 6% interest rate.In today’s dollars, how much is Ginger really paying for the Lexus if she takes the Dealer’s Deal?Assume she takes the dealer’s deal, amortize the paymentsGo back to the Ginger problem. Assume the dealer deal was, $44,000, $4,000 down and the rest in equal annual payments that include interest at 1%.How much is Ginger really paying for the Lexus if she takes the dealer’s deal?Assume she takes the dealer deal, amortize the paymentsHannah is thinking about buying a sailboat. The dealer has offered her three options. Option 1: She can pay $30,000 for the boat, no money down and the rest in 60 equal monthly payments that include interest at 2%,Option 2: She can pay $28,000, 10% down and the rest in 48 monthly payments of interest only at 2%. At the end of 48 months in the second deal, she would pay the balance of the purchase price, $25,200. Option 3: She pays $25,000 for the boat right now.She called her bank and they told her that boat loans currently carry an 8% interest rate. Which is the better deal?Amortize the first five months of each deal.You want to buy a new Bright Yellow Geo Prism. You are trying to decide between the following deals. You called the bank and they told you they would loan you the money at a 10% interest rate.Deal #1. Savannah’s very fine used cars has offered you the car for $11,000 with the following terms. $2,000 down and interest only payments of 2% per year for 5 years. At the end of the five years you send her the $9,000. (She says he is offering you this special deal because you go to Ohio U and he almost graduated from there!)Deal #2. Honest Dave has offered you the same car for $9,500 payable with no money down and the rest in three equal annual payments which include interest at 5%.Deal #3. Andrea’s Special Deals has offered you the car for $8,200 payable with $200 down and the rest in ten annual equal payments which include interest at 10%. The first payment, after the down payment, will be due in one year.Deal #4. Makenzie’s Prism Sales has offered you the car for $8,700 cash.Rank the deals as to their attractiveness to you. Which deal is the best and why?Under which deal do you pay out the most money? ................
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