Question: A store offers two payment plans. Under the installment plan, you pay 25% down and 25 % of the purchase price in each of the

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 8% discount from the purchase price. Assume the product sells at $100 A. Calculate the present value of the payments if you can borrow or lend funds at an interest rate of 5% B. Calculate the present value if the payments on the 4- year installment plan do not start for a full year.

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