General Motors Corporation and Subsidiaries - Page 33




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          percent financing when GMAC's buy rate for a 4-year loan was 12              
          percent.  The monthly payment due on the rate-supported RISC was             
          $244, and the fair market value of the rate-supported RISC at the            
          time of purchase was $9,253.23  Even though the rate-supported               
          RISC was worth only $9,253, GMAC paid the independent GM dealer              
          $10,000.  GM paid GMAC a retail rate support payment in the                  
          amount of $747--the difference between the $10,000 face value of             
          the rate-supported RISC and the $9,253 fair market value of the              
          rate-supported RISC at the time of its purchase.                             
               2.  1985 and Post-1985                                                  
               In 1985 and thereafter, GM's retail rate support payment was            
          adjusted (reduced) for the actuarially determined retail customer            
          prepayments.  During 1985, GM reduced the retail rate support                
          payments it made to GMAC by 7 percent to take account of                     
          anticipated prepayments.  Thus, given the same facts as above for            
          pre-1985, in 1985, the retail rate support payment of $747 would             
          have been reduced to $695.                                                   
               C.  GM and GMAC Financial Accounting                                    
               1.  Rate-Supported RISC                                                 
               Suppose a retail customer's RISC had a face amount of                   
          $10,000, below-market stated interest of $2,000 to be paid by the            
          customer over the term of the RISC, and a fair market value of               

               23  The $9,253 figure is arrived at by discounting to                   
          present value the 48 monthly payments of $244 by 12 percent.                 





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