amount at low interest rate of 1.99% per year compounded monthly for 36 m year compounded monthly for 36 months. Which option is better for you?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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You plan to buy a Honda car which currently costs $22,000. The car dealer offers the following two options: you can either borrow the entire
amount at low interest rate of 1.99% per year compounded monthly for 36 months or get a cash rebate of $1000 and borrow at 3.99% per
year compounded monthly for 36 months. Which option is better for you?
Lower interest rate since monthly payment is $623
Cash rebate rate since monthly payment is $635
Lower interest rate since monthly payment is $630
Cash rebate rate since monthly payment is $620
Transcribed Image Text:You plan to buy a Honda car which currently costs $22,000. The car dealer offers the following two options: you can either borrow the entire amount at low interest rate of 1.99% per year compounded monthly for 36 months or get a cash rebate of $1000 and borrow at 3.99% per year compounded monthly for 36 months. Which option is better for you? Lower interest rate since monthly payment is $623 Cash rebate rate since monthly payment is $635 Lower interest rate since monthly payment is $630 Cash rebate rate since monthly payment is $620
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