You have 10000 down payment on a 20000 car paying the


You have $10,000 down payment on a $20,000 car. The dealer offers you the following two options: (a) paying the balance with end−of−month payments over the next three years at i (12) = 0.12; (b) a reduction of $500 in the price of the car, the same down payment of $10,000, and bank financing of the balance after down payment, over 3 years with end−of−month payments at i (12) = 0.18. Which option is better?

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Financial Management: You have 10000 down payment on a 20000 car paying the
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