Cooperative has a straight-line depreciation policy and expected economy life of its taxis for 5 years. If the drivers choose bought the taxi in cash, then cash should be paid at the day of transaction but if in installment scheme, the first installment could be made at one month after the signing transaction. If interest rate predicted in the next three years is 15%, which one is cheaper, buy in cash or pay through installment? Explain your selection using time value of money.

Answer rating: 100% (QA)

In this scenario buying the taxi in cash is the cheaper option due to the time value of money Heres ... View the full answer