A store offers two payment plans. Under the installment plan, you pay 25% down and 25%...

Transcribed Image Text:

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 get a discount of 12% on 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 9 percent. Note: 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. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b-2. Which is a better deal? Answer is complete but not entirely correct. a-1. PV of installment plan a-2. Which is a better deal? $ 63.32 (X Pay in full b-1. PV of installment plan b-2. Which is a better deal? $ 58.11 X Installment plan 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 get a discount of 12% on 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 9 percent. Note: 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. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b-2. Which is a better deal? Answer is complete but not entirely correct. a-1. PV of installment plan a-2. Which is a better deal? $ 63.32 (X Pay in full b-1. PV of installment plan b-2. Which is a better deal? $ 58.11 X Installment plan