PFIN 2nd Edition by Lawrence Gitman ,Michael Joehnk,Randall Billingsley

Exercise 7

Assume that you've been shopping for a new car and intend to finance part of it through an installment loan. The car you're looking for has a sticker price of $15,000. Excellent Autos has offered to sell it to you for $2,500 down and finance the balance with a loan that will require 48 monthly payments of $329.17; Hot Cars will sell you exactly the same vehicle for $3,000 down plus a 60-month loan for the balance, with monthly payments of $268.45. Which of these two finance packages is the better deal?