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a dealer offers to sell a truck for $230,000 with a 3 year financing at 1.5%...

a dealer offers to sell a truck for $230,000 with a 3 year financing at 1.5% (3 equal payments) and the market rate is 6%

Another dealer offers to sell a truck for $208,000 but financing needs to be done through the bank at 6% (4 equal payments)

I am having a hard time understanding how the 1.5% is supposed to affect the lease payment schedule, and how this is different/similar than calculating the present value of a bond.

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Option 1. a dealer offers to sell a truck for $230,000 with a 3 year financing at 1.5% (3 equal payments) and the market rate is 6% Loan Amount Rate Loan Period Yearl 230,000.00 1.50% 1.50% 3.00 78,978.08 3.00 years ment Year Year $ 78,978.08 $78,978.08 $ 78,978.08 |pV factor @6% |Present Value 0.9434 74,507.92 0.8900 70,290.49 0.83962 66,311.58 Present Value 211,110 ent 2 Option 2: Another dealer offers to sell a truck for $208,000 but financing needs to be done through the bank at 6% (4 equal Since the borrowing rate is equal to market rate the present value will be $208,000 onl ents Option 1 Option 2 Difference Present Value 211,110 $ 208,000 S 3,110 Since present value in option 1 is higher by $3,110, hence option 2 should be accepted

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