(Solved) Another type of sales promotion for vehicles is to advertise the choice between a "Cash Purchase ...

Another type of sales promotion for vehicles is to advertise the choice between a "Cash Purchase Price" or "0% Purchase Financing." The tiny print at the bottom of a GM Canada full-page advertisement included the statement: "TheGMACpurchasefinanceratesarenotavailablewithandarenotcalculatedonthe'CashPurchasePrice'shown. ThedifferencebetweenthepricefortheGMACpurchasefinanceofferandthe'CashPurchasePrice'offerisdeemedunderprovinciallawstobeacostoffinancing." In other words, there are two prices for a vehicle-a lower price if you pay cash and a higher price if you want to take advantage of the "0% financing." An additional disconcerting aspect of this type of promotion is that the higher price for the 0% financing is usually not quoted in the advertisement. Rather, it must be negotiated with the dealer.

Suppose the Cash Purchase Price of a car is $23,498, and the price that qualifies for full 0% financing (with 48 monthly payments) turns out to be $26,198. What effective interest rate will you be paying for the "0% financing?" Round to the nearest 0.01%

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Another type of sales promotion for vehicles is to advertise the choice between a "Cash Purchase ...

Business Mathematics in Canada

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