Use Worksheet 7.2. Matilda Edwards wants to buy a home entertainment center. Complete with a big-screen TV, DVD, and sound system, the unit would cost $6,000. Matilda has over $15,000 in a money fund, so she can easily afford to pay cash for the whole thing (the fund is currently paying 5.8 percent interest, and Matilda expects that yield to hold for the foreseeable future). To stimulate sales, the dealer is offering to finance the full cost of the unit with a 36-month, simple interest installment loan at 7 percent, simple. (Note: Assume Matilda is in the 15 percent tax bracket and that she itemizes deductions on her tax returns.)

1. Should she pay cash for the home entertainment center or buy it on time? -Select-pay cashbuy on time