Personal Financial Planning 13th Edition by Lawrence Gitman,Michael Joehnk,Randy Billingsley

Exercise 22

Jack Colsen wants to buy a new high-end audio system for his car. The system is being sold by two dealers in town, both of whom sell the equipment for the same price of $2,000. Jack can buy the equipment from Dealer A, with no money down, by making payments of $119.20 a month for 18 months; he can buy the same equipment from Dealer B by making 36 monthly payments of $69.34 (again, with no money down). Jack is considering purchasing the system from Dealer B because of the lower payment. Find the APR for each alternative. What do you recommend