. Extended Warranty. Ted just moved into an apartment, and it does not have a re

Question

. Extended Warranty. Ted just moved into an apartment, and it does not have a refrigerator. A refrigerator is worth $3 every day because Ted will eat out less. Ted has a discount rate of 28%. Refrigerators usually last 4 years.

a. How much is Ted willing to spend on a refrigerator?

b. Lowe's is offering a financing deal with 10% downpayment and 4 years of payments every year of payments equals 25% of the purchase price. At these terms, how much is Ted willing to spend on the fridge?

---------------

The question I have is with B part. I believe part A may be necessary for part B. I have already asked this question on here before, and the answer given to me was wrong.. So please don't copy and paste theirs

Explanation / Answer

Ans:

A) Cash outflow Discount rate@ 28 for years PV Value 3*365= 1095 2.241 488.62 Total Outflow 488.62 Without Financing Cost 488.62 B) S. No 1 Cash Price 1095 2 Less Downpayment @10% 109.5 3 Net 985.5 4 Balance purchase Price 25% 5 Interst @25%on Net 246.38 Multiple of 3 and 4 6 Total 1231.88 Sum Of 3+5 4 Yearly Equal Installment 307.97 With Financing will Spend 307.97

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.