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Decide how to finance the car

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Reference no: EM132941682

You are considering buying a sports car with a list price of $99,000. The dealer has offered you two payment alternatives:

  • You can get a $9,000 discount if you pay cash today.
  • You can buy the car for the list price of $99,000. You need to make a down payment of $39,000. The remainder $60,000 is a "zero-interest loan" to be paid back in equal installment over 36 months.

Problem 1: Alternatively, your bank is willing to give you a car loan with APR of 10%, compounded monthly. Decide how to finance the car: bank loan, zero-interest loan with the dealer, or cash payment.

Cost of car 90,000

cash 90,000

credit cost 99,000

Reference no: EM132941682

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