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 3 years. If you pay the entire bill immediately, you can take a 10% discount from the purchase price.

a. Which is the better deal if the interest rate is 6.0%?

multiple choice 1

• Installment Plan

• Immediate Plan

b. How will your answer change if the four payments on the installments do not start until the end of the year?

multiple choice 2

• Installment Plan

• Immediate Plan