Connect Access Card for Financial Accounting
9th Edition
ISBN: 9781259738678
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Chapter 9, Problem 2MCQ
The university golf team needs to buy a car to travel to tournaments. A dealership in Lockhart has agreed to the following terms: $4,000 down plus 20 monthly payments of $750. A dealership in Leander will agree to $1,000 down plus 20 monthly payments of $850. The local bank is currently charging an annual interest rate of 12% for car loans. Which is the better deal, and why?
- a. The Leander offer is better because the total payments of $18,000 are less than the total payments of $19,000 to be made to the Lockhart dealership.
- b. The Lockhart offer is better because the cost in terms of present value is less than the present value cost of the Leander offer.
- c. The Lockhart offer is better because the monthly payments are less.
- d. The Leander offer is better because the cash down payment is less.
- e. The Leander offer is better because the cost in terms of present value is less than the present value cost of the Lockhart offer.
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Chapter 9 Solutions
Connect Access Card for Financial Accounting
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