A businessman wants to buy a truck. The dealer offers to sell the truck for either...

 

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A businessman wants to buy a truck. The dealer offers to sell the truck for either (i) $110,000 now, or (ii) five yearly payments of $30,000 at the end of each year. If the businessman does not have enough cash but can get a loan from the bank at 11% interest rate, which offer should he choose from the dealer? Option (i) because the dealer charges 11.32% Option (ii) because the dealer charges 11.32% Option (i) because the dealer charges 13.12% Option (ii) because the dealer charges 13.12% Option (ii) because the dealer charges 12% A businessman wants to buy a truck. The dealer offers to sell the truck for either (i) $110,000 now, or (ii) five yearly payments of $30,000 at the end of each year. If the businessman does not have enough cash but can get a loan from the bank at 11% interest rate, which offer should he choose from the dealer? Option (i) because the dealer charges 11.32% Option (ii) because the dealer charges 11.32% Option (i) because the dealer charges 13.12% Option (ii) because the dealer charges 13.12% Option (ii) because the dealer charges 12%

Answer rating: 100% (QA)

Step 3 Since the rate charged by the bank 11 is lower t... View the full answer