You need a new car and the dealer has offered you a price of $20,000, with the

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 $2000 rebate, or

(b) Pay a $5000 down payment and finance the rest with a 0% APR loan over 30 months. But having just quit your job and started an MBA program, you are in debt and you expect to be in debt for at least the next 21⁄2 years. 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?

Dealer
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...