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    How is a car loan an example of TVM?

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    How is a car loan an example of TVM? Under what circumstances should an individual take out a loan versus pay all cash? How have recent zero $ down and zero $ interest for 12 months affected potential cash buyers?

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    Time Value of Money is the value derived from the use of money over time as a result of investment and reinvestment. A loan taken for car today will help me buy the car today itself, instead of having to wait for couple of years to save all the money required to make the purchase all at once. Even though I will have to make some down ...

    Solution Summary

    This solution explains the concept of Time Value of Money (TVM) and justifies the choice in taking out a loan or paying it all in cash with respect to interest and potential cash buyers.