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    Evaluating Automobile Financing Options

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    The price would be $18,239. You would pay $2,000 now and the rest monthly on a four year loan. The automobile dealership in offering a sales promotion where either a. you will receive a $1,000 rebate check right now and the annual interest rate on the loan will be 11.9% or b. the annual interest rate on the loan will be 1.9% but there is no rebate. Create a worksheet to compare the two options by calculating the present value of each of the options, assuming an 8% discount rate. Which is the better deal? Write a paragraph to justify the answer.

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    Solution Summary

    This solution illustrates how to compare automobile financing options.