A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of
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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 9% from the purchase price. Assume the product sells for $100.
a-1.Calculate the present value of the payments if you can borrow or lend funds at an interest rate of 4 percent.(Do not round intermediate calculations. Round your answer to 2 decimal places.)
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.)
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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