An auto dealership, KM Motors, is offering its customers free credit on a $10,000 car. The customer pays $4000 down and then the balance at the end of 2 years. A competing dealership, T Motors, does not offer free credit but will provide $500 off of the list price. If the interest rate is 10 percent, which company is offering the better deal?
Note that the customer pays more in sum through KM Motors, but since a portion of the payment is delayed, the customer can keep the ...
This solution is comprised of a simple explanation of how to calculate the present value of an investment