How to make the down payment and the quarterly payments

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An automobile is priced at $ 7,000. A buyer may purchase the car for $ 6,500 now, or alternatively, the buyer can make a down payment of $ 1,000 now and pay the remaining $ 6,000 in eight equal quarterly payments ( over 2 years) at 8 percent compounded quarterly. If the buyer's TVOM is 10 percent per year compounded quarterly, would the buyer prefer to pay the $ 6,500 outright, or make the down payment and the quarterly payments?

Reference no: EM13235806

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