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James wants to purchase a 2017 911 for $120,00. Two financing options are available for him:

Option 1: 6 % APR compounded monthly, $20,000 down payment and 60 equal monthly payments.

Option 2: 5% APR compounded continuously, $10,000 down payment and 36 equal monthly payments.

a) What is the monthly payment for each these two financing options?

b) Suppose James can always invest his money with a rate of return of 6% per year, recommend the option he should choose through present worth analysis.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92795914

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