Explore BrainMass

Explore BrainMass

    calculate the present value of an investment

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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?

    © BrainMass Inc. brainmass.com June 3, 2020, 4:47 pm ad1c9bdddf
    https://brainmass.com/business/accounting/calculate-present-value-investment-3981

    Solution Preview

    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 ...

    Solution Summary

    This solution is comprised of a simple explanation of how to calculate the present value of an investment

    $2.19

    ADVERTISEMENT