The university golf team needs to buy a car to travel to tournaments. A dealership in Bellevue
Question:
The university golf team needs to buy a car to travel to tournaments. A dealership in Bellevue has agreed to the following terms: $4,000 down plus 20 monthly payments of $750. A dealership in Seattle will agree to $1,000 down plus 20 monthly payments of $850. The local bank is currently charging an annual interest rate of 12 percent for car loans. Which is the better deal, and why? a. The Seattle offer is better because the total payments of $18,000 are less than the total payments of $19,000 to be made to the Bellevue dealership. b. The Bellevue offer is better because the cost in terms of present value is less than the present value cost of the Seattle offer. c. The Bellevue offer is better because the monthly payments are less. d. The Seattle offer is better because the cash down payment is less. e. The Seattle offer is better because the cost in terms of present value is less than the present value cost of the Bellevue offer.
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