statistics help needed

Question

"Zero percent financing" means the obvious thing—that no interest is being charged on the loan. So if we borrow $1200 at 0% interest and pay it off over 12 months, our monthly payment will be $1200/12 = $100. 

Suppose you are buying a new truck at a price of $10,000. You plan to finance your purchase with a loan you will repay over two years. The dealer offers two options: either dealer financing with 0% interest, or a $1000 rebate on the purchase price. If you take the rebate, you will have to go to the local bank for a loan (of $9,000) at an APR of 6.5%. 

Should you take the dealer financing or the rebate? (Assume you take the deal that saves you the most money.) 

How much would you save over the life of the loan by taking the option you chose? (Round your answer to the nearest cent.) 

$ ?

Answer 1

The dealer financing option (assuming that you only make minimum payments for the entire two years) will lead to you having to pay $10,000 over two years while the rebate option (assuming that you only make minimum payments for the entire two years) will lead to you having to pay $9,000*(1.065)²= $10208.03 over two years. You should take the dealer financing option since it will save you $208.03 over two years.