So, the finance amount is, let's say, $16,000. At 0%, that's $333.33 payment per month. Let's also say I have that money, and put it in a daily interest account that pays 2.35% interest.

I just made a spreadsheet that starts with the opening balance of $16,000. On the first day of each month, the $333.33 is debited. On the last day of the month, bank interest is credited. For the monthly interest calculation I used...

Interest = (Balance*(1+(Interest/365))^DaysInMonth))-Balance.

I don't know if that's perfect, but maybe good enough for "wet finger" estimations? If the finance payment were to come out in the middle of the month, the daily interest would need to be split into before/after the payment.

What it shows, after 48 months, is a final balance in the account of about $786. That's the interest accumulated over the 4 years. That seems to me like a better deal to finance it rather than the $500 up-front cash discount.

Now, if I were to use an account that only pays 1.25% interest, the end of term balance is $406. In this case the up-front $500 to pay cash looks like a much better deal.

So, am I leaving anything out that needs to be considered? Is my logic even correct? Of course, interest rates my rise ( or fall ) in the 48 months, and inflation can possibly make that $768 buy less in 4 years than the $500 does today (Canadazuela ?), but how can that be factored into a spreadsheet?