Question
Buddy Holly will sell you the Big Bopper for $40,000. The deal is you pay for the Big Bopper in three equal annual payments that
Buddy Holly will sell you the Big Bopper for $40,000. The deal is you pay for the Big Bopper in three equal annual payments that include interest at 4%. You put no money down and the first payment is not due until one year from today!! You called the bank and they said that they would charge you 10% for a similar loan. A.) How much are the payments if you take Buddy's deal? (Options: $ 11,200.00, $ 10,810.46, $ 12,063.44, $ 14,413.94, None of the above)
B.) How much are you really paying for the Big Bopper under Buddy's deal? (Options: $35,845.34, $26,884.01, $30,000, $36,190.82, None of the above)
C.) If you amortize the Buddy deal properly, the interest for the first year would be? (Options: $3,584.53, $3,000.00, $2,866.40, $1,200.00, None of the above)
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