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Cash vs. Installment Plan Suppose that a car dealer gives you a choice between paying $15,500 for a new car or entering into an installment

Cash vs. Installment Plan

Suppose that a car dealer gives you a choice between paying $15,500 for a new car or entering into an installment plan where you pay $8,000 down today and make payments of $4,000 in each of the next two years. Assuming the interest rate you can earn by depositing your money risk-free is 8%, which is the better deal?

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