2.Now, lets think about a loan that is amortized over a shorter period of time: a car loan. You are trying to decide between buying a new or used car. The used car has relatively low mileage and is in good condition. Both vehicles come with good warranties.

You can borrow either $15,000 (new) or $5,000 (used) over 3 years at 6.5% interest Do you buy new or used? Explain using the economic way of thinking and consider how you will allocate the released funds if you purchase used.