Question
A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price in each of the next
A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price in each of the next 3 years. If you pay the entire bill immediately, you can take a discount of 9% from the purchase price. Assume the product sells for $100.
a-1.Calculate the present value of the payments if you can borrow or lend funds at an interest rate of 4 percent.(Do not round intermediate calculations. Round your answer to 2 decimal places.)
b-1.Calculate the present value if the payments on the 4-year installment plan do not start for a full year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Step by Step Solution
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Step: 1
a1 To calculate the present value of the payments under the installment plan with an interest rate o...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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