mylenelozano17
Answered

Explore Westonci.ca, the top Q&A platform where your questions are answered by professionals and enthusiasts alike. Join our Q&A platform to connect with experts dedicated to providing accurate answers to your questions in various fields. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform.

An appliance is for sale at either (a) P15,999 cash or (b) on terms, P1,499 each month for the next 12 months.  Money is 9% compounded monthly.  Which is lower, the cash price or the present value of the installment terms? Explain.​

Sagot :

Answer:

Cash price

Step-by-step explanation:

The computation is shown below:

The Interest rate per month (r) = (9% ÷ 12) = 0.75%

Now Present value of the monthly payment is

= PMT × {[(1 + rate of interest)^number of years - 1] ÷ rate of interest}

= 1,499 × {[(1 + 0.75%)^12 - 1] ÷ 0.75%}

= 18,748.89

And the cash price is 15,999

So, the cash price would be lower

Cricetus

The cash price would be lower. A further explanation is below.

According to the question,

Interest rate per month,

[tex]r = \frac{9 \ percent}{12}[/tex]

  [tex]= 0.75[/tex] (%)

hence,

The Present value of the monthly payment will be:

= [tex]PMT\times \frac{{(1 + Interest \ rate)^{number \ of \ years} - 1}}{Interest \ rate}[/tex]  

= [tex]1499\times \frac{[(1 + 0.75 \ percent)^{12} - 1] }{0.75 \ percent}[/tex]  

= [tex]18748.89[/tex]

As we can see that the cash price is 15,999. Thus the above answer is right.

 

Learn more:

https://brainly.com/question/4187682

Visit us again for up-to-date and reliable answers. We're always ready to assist you with your informational needs. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Your questions are important to us at Westonci.ca. Visit again for expert answers and reliable information.