In its Year-End Countdown Sale, a local Cadillac car dealer advertised 0% interest for 60 months! What

Question:

In its “Year-End Countdown Sale,” a local Cadillac car advertised “0% interest for 60 months!” What role does the time value of money play in this promotion? Assuming that the car is able to borrow funds at 8 percent interest, what is the cost to the of every customer who takes advantage of this offer? If you could borrow money to buy a car from this which rate would be more relevant in determining how much you might offer for the car: the rate at which you borrow money, or the rate at which the borrows money?

Dealer
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...