View stunning SlideShares in full-screen with the new iOS app!Introducing SlideShare for AndroidExplore all your favorite topics in the SlideShare appGet the SlideShare app to Save for Later — even offline
View stunning SlideShares in full-screen with the new Android app!View stunning SlideShares in full-screen with the new iOS app!
Example: buying a new car with a price of $20,000, with two financing options:
1.9% financing (60 months) from car dealer
$2,500 rebate, then 10% (60 months) financing from your bank
Which option should you choose?
$2,500 rebate Find monthly payment 17,500 +/- PV 10 I/YR 60 N PMT $371.82 1.9% financing Find monthly payment 20,000 +/- PV 1.9 I/YR 60 N PMT $349.68 1.9% financing is the better deal because of the lower monthly payments.
If we take the $2,500 rebate, we would need to borrow: $20,000 – $2,500 = $17,500 from the bank. If we were to make a monthly payment of $349.68, we would need to borrow from the bank: $349.68 PMT 10 I/YR 60 N PV $16,458 1.9% financing is the better deal because it represents a lower cost in present value .