You have saved up $30,000 for a new car. A car dealer is offering car you want for a price of $30,000 with 0% financing for one year or a cash price of $28,500.

1. If the applicable interest rate is 6%, which deal is better, the cash deal or the 0% financing deal? Explain, provide necessary computations
2. Demonstrate that taking the decision is equivalent to increasing your cash by the amount equal to the NPV of the decision