question archive You are purchasing a new $65,000 lathe for your machine shop

You are purchasing a new $65,000 lathe for your machine shop

Subject:AccountingPrice:9.82 Bought3

You are purchasing a new $65,000 lathe for your machine shop. The manufacturer has offered to finance it for you at 2.9% over 60 months or to give you a $3,000 cash discount. What is the true cost of the manufacturer financing?

Group of answer choices

2.9%

4.83%

3.93%

9.43%

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4.83%

Step-by-step explanation

True Cost = Discount/(Purchase Price - Discount)

True Cost = 3,000/(65,000 - 3,000)

True Cost = 3,000/62,000

True Cost = 0.0483 or 4.83%

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