Q3- Assuming monthly payments, which one of the following plans are better for buying a $15,000...
Q3- Assuming monthly payments, which one of the
following plans are better for buying a $15,000 van?
a) 6% on the full amount for 4 years.
b) $2500 discount and 12% interest on the remaining amount for 4
years.
please explain all steps and show equations. thank you
Homework Answers
a) No of Months = 12* 4 = 48
Rate per month = 6%/12
Periodic Payments = 15000/(1-(1+0.5%)-48)/0.5% =
352.28
b)PV = 15000 - 2500 = 12500
Rate per month = 12/12% = 1%
Periodic Payments = 12500/(1-(1+1%)-48)/1% =
329.17
Second payment is better.
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