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A store offers two payment plans. Under the installment plan, you pay 20% down and 20% of the purchase price in each of the next
A store offers two payment plans. Under the installment plan, you pay 20% down and 20% of the purchase price in each of the next 4 years. If you pay the entire bill immediately, you can take a 5% discount from the purchase price. |
a. | Calculate the present value of the payments, if you can borrow or lend funds at a 4% interest rate. Assume the product sells for $100. (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
Present value | $ |
b. | Calculate the payment net of discount. |
Payment net of discount | $ |
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