You are planning to buy a new car. The cost of the car is$50,000. You have been offered two payment plans:
• A 10 percent discount on the sales price of the car, followedby 60 monthly payments financed at 9 percent per year.
• No discount on the sales price of the car, followed by 60monthly payments financed at 2 percent per year.
If you believe your annual cost of capital is 9 percent, whichpayment plan is a better deal? Assume all payments occur at the endof the month.
Can you demonstrate these in EXCEL?
