A car dealership offers a car for $14,000, with up to one year to pay for the car. If the interest rate is 5%, what is the net present value (NPV) of this offer to buyers who elect not to pay for the car for one year?

Name: A car dealership offers a car for $14,000, with up to one year to pay for the car. If the interest rate is 5%, what is the net present value (NPV) of this offer to buyers who elect not to pay for the car for one year?
Brand: Quizplus
Rating: 4.9 (42 reviews)

Question

Quizplus · Accepted Answer

A) $14,000 / (1 + 0.05) = $13,333.3333;
$14,000 - $13,333 = $667

A Car Dealership Offers a Car for $14,000, with Up