Question
you need a new car and the dealer has offered you a price of $20,000, with the following payment options: A)pay cash and receive a
you need a new car and the dealer has offered you a price of $20,000, with the following payment options:
A)pay cash and receive a $2,000 rebate, making the price of the car $18,000.This means you will be financing $18,000 somehow to take advantage of this offer and pay the dealer.
B)pay a $5,000 down payment and finance the remaining $15,000 with a 0% APR loan over 30 months.
Just finishing your MBA Program, you are in debt and you expect to be in debt for at least the next 2.5 years, including debt from the purchase of the new car.You plan to use credit cards to pay your expenses;luckily you have one with a low (fixed) rate of 15% APR (monthly).Which payment option is best for you?(Hint:how much will you pay for the $5,000 over 30 months?
C)Explain in a sentence or two if you think the 15% is a "real" or a nominal/market rate of interest and why?
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