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| rev | Admin | (Created page with "'''Solution: B''' Let the annual payment <math>=C</math>. The PV of all my payments, discounted at the dealer's rate, must equal to the price, i.e., <math display="block"> \begin{aligned} & 3500+\frac{C}{0.02}\left(1-\frac{1}{1.02^5}\right)=30000 \\ & 3500+4.71346 C=30000 \\ & C=\$ 5,622.20 \end{aligned} </math> Since I can save at a higher rate, the cost of the financing plan in (a) is only 3500 + C/0.05 (1 − 11.05<sup>5</sup> ) = $27, 841.17. The cost of the sec...") | Dec 4'23 at 20:30 | +826 |