Mr. Paul Zantis is buying a used car. The price tag is $2000. There are two financing options available to Zantis:

1. The dealer explains that if Zantis pays cash, he will a 15% discount. In this cas Zantis will pay $1700 for the car today. Because Zantis doesn't have the money now, he intends to borrow the $1700 from his uncle Adam, who charges 10% interest.

2. On the other hand, the dealer will give Zantis "0% financing": Zantis doesn't have to pay anything now and can pay the dealer the full cost of the car at the end of the year.

Thus, Zantis has two choices: The dealer's '0% financing and Uncle Adam's 10% rate. Zantis would like your advice in order to choose the cheaper option.

Answer rating: 100% (QA)

To determine which option is cheaper for Mr Paul Zantis lets calculate the total ... View the full answer