**Answer:**

A.** $20,000
**

B.** $17,234.18
**

C.**Option (b)**

**Explanation:**

Obviously, the option with lower Present Value would be the best option to buy the car. The Present Value of the options can find out as following

**REQUIREMENT A**

Price of car = $24,600

Rebate = $4,600

Present value of the payments for option = Price of the car – rebate

Present value of the payments for option (a) = $24,600 - $4,600

Present value of the payments for option = $20,000

**REQUIREMENT B**

We can use the following Present Value of an Annuity formula to calculate the present value of the payments

PV of the payments for option = PMT * [1-(1+i) ^-n)]/i

PV of the payments for option (b) (PV) =?

Monthly payment PMT =$410 per month

Number of payments n = 5 years *12 months = 60

Monthly interest rate i=1.25% per month or 0.0125

PV of the payments for option = $410 x [1- (1+0.0125) ^-60]/0.0125

**PV of the payments for option = $17,234.18
**

**REQUIREMENT C.**

**Which is the better deal? **

**Option (b)** is better deal as the** present value** of payments **($17,234.18)** is less than Present value of the payments for option (a); **$20,000.**