Week 4 Case Studies Complete the following case studies from chapter 11: Case Study 11-2: the price of money, PP 423-424 Case study 11-3. Quality photo printing, pp. 424-425 Note; Show all your work and calculations. The use of Microsoft Excel software is required 11-2 The Price of Money James wants to buy a 50-inch flat-screen television, and the model he wants costs $1,200. So far, he has saved $700, but still needs $500 more. The bank where he has a checking and savings account will loan him $500 at 12% annual interest using a 90-day promissory note. James also visited a loan store for a \"pay day\" loan to compare the cost of borrowing. The manager told James that he could borrow $500 at 12% for two weeks. If James needed more time to repay the loan, he would be charged 16% on the balance due for each additional week. He wondered how much it would cost to pay the loan back in 12 weeks so he could compare the cost to the bank's lending rate. James recognized that 12 weeks is a few days less than 90 days. 1. Calculate the total cost (principal plus interest) for the 90-day promissory note from the bank. 2. How much will James pay if he gets the money from the loan store and pays the balance back in two weeks? 3. How much will it cost if James gets the money from the loan store and pays it back in 12 weeks (nearly 90 days)? 4. James wondered how the loan store can stay in business unless its customers neglect to determine how much they owe before agreeing to borrow. What do you think? When would a payday loan be an appropriate choice? 11-3 Quality Photo Printing As a professional photographer, Jillian had seen a significant shift in customer demand for digital technologies in photography. Many customers, attempting to save a few dollars, had invested in low-end digital cameras (and even lower-end printers) to avoid processing fees typically associated with printing photographs. The end result, for most customers, was a bounty of digital photographic images but with limited options for creating quality printed digital photographs. Jillian was hoping to tap into this underserved market by offering customers superior quality digital printing using advanced pigment inks to produce exquisite color prints. To provide this service, Jillian needs to purchase a state-of-the-art photo printer she found listed through a photography supply company for $8,725, plus sales tax of 5.5%. The supply company is offering cash terms of 3/15, n/30, with a 1.5% service charge on late payments, or 90 days same as cash financing if Jillian will apply and is approved for a company credit card. If she is unable to pay within 90 days under the second option, she would have to pay 24.9% annual simple interest for the first 90 days, plus 2% simple interest per month on the unpaid balance after 90 days. Jillian has an excellent credit rating, but is not sure what to do 1 If Jillian took the cash option and was able to pay off the printer within the 15-day discount period, how much would she save? How much would she owe? 2. If Jillian takes the 90 days same as cash option and purchases the printer on December 30 to get a current-year tax deduction, using exact time, what is her deadline for paying no interest in a non-leap year? In a leap year? Is the finance company likely to use exact or ordinary interest and why? 3. If Jillian takes the 90 days same as cash and pays within 90 days, what is her payoff amount? If she can't pay until April 30, how much additional money would she owe? (Assume ordinary interest and exact time and a non-leap year.) Jillian finds financing available through a local bank. Find the bank discount and proceeds using ordinary interest for a 90-day promissory note for $9,200 at 8% annual simple interest. Is this enough money for Jillian to cover the purchase price of the printer? Is this a better option for Jillian to pursue, and why or why not