You have $5,000 down payment on a $20,000 car. The dealer offers you the following two options:

(a) paying the balance with end-of-month payments over the next five years at

^(12) = 9%.

(b) a reduction of $1000 in the price of the car, the same down payment of $5,000, and bank financing of the balance after down payment, over 5 years with end-of- month payments at ^(12) = 12%.

Which option is better and why? (DO NOT USE EXCEL)