A car dealer offers you a new car. But you have to pay the purchase price of 22.000 in 3 years. Since you have already saved the money for the car purchase, you also ask for the cash price, which indicates the dealer with 19.500 . This is exactly the amount you have saved for the car purchase.

Question 1: What is the current cash value 0 of 22,000 to be paid in 3 years if the required rate of return is i = 5%? Which offer is better for you?

Question 2: As a further financing alternative, the car dealer offers a installment credit. If accepted, in the next 3 years at the end of each year 7,500 would have to be paid. Is this offer better than the other two?