Two financing options are being offered in purchasing a vehicle:
• Option 1: cash purchase at $20,500.
• Option 2: Debt purchase - Purchase the vehicle at the price of $22,600 and finance it over three years with
equal monthly payments at 3.5% APR.
Which option is more economical at an interest rate of 6% compounded monthly?

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The Answer of Two financing options are being offered in purchasing a vehicle:
• Option 1: cash purchase at $20,500.
• Option 2: Debt purchase - Purchase the vehicle at the price of $22,600 and finance it over three years with
equal monthly payments at 3.5% APR.
Which option is more economical at an interest rate of 6% compounded monthly?

Two Financing Options Are Being Offered in Purchasing a Vehicle