Question
You are considering buying a car and arranging financing from the car dealer. You are presented with two options to buy a car with a
You are considering buying a car and arranging financing from the car dealer. You are presented with two options to buy a car with a competitive price of $37,000: Option 1: Pay the full sticker price of $42,500 but receive 0% financing on a 60- month loan. Option 2: Deduct a rebate of $6,000 on the car but pay a 6% contractual interest rate on a 60-month loan. Your competitive interest rate is 5%. Select the correct answer below:
a. Option 1 is the better deal, as it creates value for you.
b. Option 1 is the better deal, as it destroys less value for you than Option 2.
c. Option 2 is the better deal, as it creates value for you.
d. Option 2 is the better deal, as it destroys less value for you than Option 1.
e. None of the above
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