Question
You have decided to buy a used car. The dealer has offered you two options: (FV of $1, PV of $1, FVA of $1, and
You have decided to buy a used car. The dealer has offered you two options: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)
- Pay $580 per month for 30 months and an additional $12,000 at the end of 30 months. The dealer is charging an annual interest rate of 24%.
- Make a one-time payment of $18,265, due when you purchase the car.
1-a. Determine how much cash the dealer would charge in option (a). (Round your answer to 2 decimal places.)
1-b. In present value terms, which offer is clearly a better deal?
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
9th edition
1-119-49356-3, 1119493633, 1119493560, 978-1119493631
