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Problem 5-36 Annuity Due (L03) A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price
Problem 5-36 Annuity Due (L03) 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 6% from the purchase price. Assume the product sells for $100. 0-1. Calculate the present value of the payments if you can borrow or fend funds at an interest rate of 3 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.) a-2 Which is a better deal? 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.) b-2. Which is a better deal? a-1 a-2. PV of installment plan Which is a better deal? PV of installment plan Which is a better deal? Pay in full $ b-1 90.75 b-2 installment plan
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