Question
You are looking at the car that is currently selling at $65,000. Classic Autos is offering free credit (i.e. no interest charged on the borrowed
You are looking at the car that is currently selling at $65,000. Classic Autos is offering free credit (i.e. no interest charged on the borrowed amount) on the car. You pay $10,000 down today and then pay the remaining balance at the end of 6years. Premium Motors next door does not offer credit, but will give you $20,000 off the list price if you pay cash now. Assume annual compounding with 9% discount rate. Which of the following statement is TRUE?
| A. | Premium autos is offering a better deal since its PV of cost is approximately 500 lower than that of Premium Motors. | |
| B. | Classic autos is offering a better deal since its PV of cost is approximately 2,200 lower than that of Premium Motors. | |
| C. | Classic autos is offering a better deal since its PV of cost is approximately 600 lower than that of Premium Motors. | |
| D. | Premium autos is offering a better deal since its PV of cost is approximately 2,400 lower than that of Premium Motors. |
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Financial Sector Reform And Privatization In Transition Economies
Authors: John Doukas, Victor Murinde, Clas Wihlborg
1st Edition
044482653X, 9780444826534
