Consider the following two options proposed by an auto dealer:• Option A: Purchase the vehicle at the normal price of $26,200 and pay forthe vehicle over 36 months with equal monthly payments at 1.9% APRfinancing.• Option B: Purchase the vehicle at a discounted price of $24,048 to be paid immediately.The funds that would be used to purchase the vehicle are presently earning 5% annual interest compounded monthly.Which option is more economically sound?
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Consider the following two options proposed by an auto dealer:
• Option A: Purchase the vehicle at the normal price of $26,200 and pay for
the vehicle over 36 months with equal monthly payments at 1.9% APR
financing.
• Option B: Purchase the vehicle at a discounted price of $24,048 to be paid immediately.
The funds that would be used to purchase the vehicle are presently earning 5% annual interest compounded monthly.
Which option is more economically sound?
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