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Denzel needs a new car. At the dealership, he finds the car that he likes. The dealership gives him two payment options: Pay $29,000 for
Denzel needs a new car. At the dealership, he finds the car that he likes. The dealership gives him two payment options:
- Pay $29,000 for the car today.
- Pay $2,800 at the end of each quarter for three years.
Required: 1-a. Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value. 1-b. Which option gives him the lower cost?
Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.)
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