You want to buy a new Tesla car. There are only two dealers in your city who sell it. The car costs ₹ 2,000,000. Dealer A offers to sell it to you for cash at a 10% discount. Dealer B offers you a 0% interest loan - you pay equal installments of ₹ 41666.67 for 48 months.

a. Suppose you want to buy this using investment you have in a fund that pays you 5% per year, which option is better?

b. If you buy using your credit card that charges you 10% per year interest for unpaid credit balance, which option is better?

Answer rating: 100% (QA)

a If you have the cash to buy the car upfront and you invest it in a fund that pays you 5 per year t... View the full answer