You can buy a car that is advertised for $24,600 on the following terms: (a) pay $24,600 and receive a $4,600 rebate from the manufacturer; (b) pay $410 a month for 5 years for total payments of $24,600, implying zero percent financing.
a. Calculate the present value of the payments for option (a) if the interest rate is 1.25% per month.
b. Calculate the present value of the payments for option (b) if the interest rate is 1.25% per month. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
c. Which is the better deal? Option a or Option b.