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Susan wishes to purchase a laptop computer. She is offered the following payment options: Option 1 : $0 down, $432 in 1 year, $300 in
Susan wishes to purchase a laptop computer. She is offered the following payment options:
Option 1 : $0 down, $432 in 1 year, $300 in 2 years
Option 2 : $82.56 down, $250 in 1 year, $400 in 2 years
Determine the range of the interest rate i for which the present value of Option 1 is less than the present value of Option 2.
A) 4.2%< i <16.3%
B) i <4.2% or i >16.3%
C) 3.5%< i <10.2%
D) i <3.5% or i >10.2%
E) i >4.2%
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