Henri has decided to purchase a $25,000 car. He can either liquidate some of his investments and

Question:

Henri has decided to purchase a $25,000 car. He can either liquidate some of his investments and pay cash, or accept the dealer’s proposal that Henri pay $5000 down and $8000 at the end of each of the next three years.
a. Which choice should Henri make if he can earn 7% compounded semiannually on his investments? In current dollars, what is the economic advantage of the preferred alternative?
b. Which choice should Henri make if he canearn11%compoundedsemiannually on his investments? In current dollars, what is the economic advantage of the preferred alternative?