6. A store offers two payment plans. Under the instalment 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 10% discount from the purchase price. a. If you can borrow or lend funds at a 6% interest rate, which is the better deal? b. If the payments on the 4-year instalment plan do not start for a full year, which plan is a better deal?
6. A store offers two payment plans. Under the instalment 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 10% discount from the purchase price. a. If you can borrow or lend funds at a 6% interest rate, which is the better deal? b. If the payments on the 4-year instalment plan do not start for a full year, which plan is a better deal?
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 17P
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16.
A store offers two payment plans. Under the instalment 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 10% discount from the purchase price.
a. If you can borrow or lend funds at a 6% interest rate, which is the better deal?
b. If the payments on the 4-year instalment plan do not start for a full year, which plan is a better deal?
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