Present

value.

A smooth-talking used-car salesman who smiles considerably is offering you a great deal on a "pre-owned" car. He says, "For only

4

annual payments of

$2,700,

this beautiful 1998 Honda Civic can be yours." If you can borrow money at

8%,

what is the price of this car? Assume the payment is made at the end of each year.

If you can borrow money at

8%,

what is the price of this car?

(Round to the nearest cent.)

2)

Number of

payments.

Tony is offering two repayment plans to Phil for a long overdue loan. Offer 1 is to receive a visit from an enforcer and the debt is due in full at once. Offer 2 is to pay back

$4,000

at the end of the year at an interest rate of

21%

until Phil pays off the loan principal. Phil owes Tony

$11,000.

How long will it take for Phil to pay off the loan if he takes offer 2?

How long will it take for Phil to pay off the loan if he takes offer 2?

3)

Payments.

Sam Hinds, a local dentist, is going to remodel the dental reception area and add two new workstations. He has contacted A-Dec, and the new equipment and cabinetry will cost

$24,000.

A-Dec will finance the equipment purchase at

7.5%

for

8

years. What will Hinds have to pay in annual payments for this equipment?

What will Hinds have to pay in annual payments for this equipment?