You are buying a new porsche boxter priced at 65200 you, Ask an Expert

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You are buying a new Porsche Boxter, priced at $65.200. You will pay $4,700 now and the rest monthly, in a four-year loan. All rates are monthly compounded APRs. The automobile dealership is offering a sales promotion where either:

A. You will receive $2,000 discount cheque now and the annual interest rate on the loan is 6.1 percent, or

B. The annual interest rate on the loan will be 1.2 percent but there is no discount.

Compare the two options by calculating the present value of each option, assuming the discount rate is 8 percent. Which option is a better deal?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92801850

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