Question

Moshi Mapesa decides to purchase a brand-new 2020 Toyota V8 with heated premium leather seats, sunroof, and satellite radio for Tshs 180 million. After paying tax and license, Moshi Pesa has Tshs 25 million as a down payment. Toyota offers Mr Mapesa the choice of 3.9% APR financing for 60 months or a Tshs 18,750,000 rebate. Moshi Mapesa can receive 6.25% APR financing for 60 months through an ACB Bank loan if the rebate option is selected. Which option would result in the lower monthly payment? At what APR along without the rebate would Mr Mapesa be indifferent between the two options?

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

SOLVED WITH BA II PLUS CALCULATOR

PMT = MONTHLY PAYMENTS ARE IN MILLIONS, NEED TO MAKE CHANGE, LET ME KNOW, WILL DO IT

C w ENG 00:56 27-07-2020 99+ 34 Х F1454 . FA FB FD FE FF FG FH EL FJ BA II PLUS set FC CAR LOAN DEALER FINANCING C/Y = P/Y = 12 PV = 1/Y = N = 454 455 456 457 458 459 460 461 462 463 464 -155 [NO REBATE AND AFTER DOWN PAYMENT] 3.90 60 FV= 0 CPT PMT= 2.85 ACB BANK LOAN PV = I/Y = N = -136.25 [18.75 MILLION REBATE AND AFTER DOWN PAYMENT] 6.25 465 466 60 FV= 0 CPT PMT= 2.65 467 468 469 470 ANS 1 ACB BANK LOAN WOULD RESULT IN LOWER MONTHLY PAYMENT 471 472 473 474 475 TO FIND RATE WHERE HE IS INDIFFERENT BETWEEN 2 OPTIONS, WE HAVE TO TAKE PMT = 2.65 N= 60 PMT = 2.65 PV = -155 FV = 0 ANS 2 1/Y = APR 1.01% 476 477 NPV ASTRO UNDER BOND Sheet3 REAL RETURN TABLE APPENDIX CUMIPMT PV FVstate Sheet4 PV FV PRICE YTM choice CON... +