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Annual percentage rate Essay Topics & Paper Examples

Time Value of Money

1) A store offers two payment plans. Under the installment plan, you pay 20% down and 20% of the purchase price in each of the next 4 years. If you pay the entire bill immediately, you can take a 5% discount from the purchase price.| a.| Calculate the present value of the payments, if you can borrow or lend funds at a 7% interest rate. Assume the product sells for $100. (Do not round intermediate calculations. Round your answer to 2 decimal places.)| Present value| $ | b.| Calculate the payment net of discount.| Payment net of discount| $ | c.| Which is a better deal?| | | | | Pay the entire bill immediately| | Installment plan| | 2)…