Question

Shayla's fridge died and she needs to buy a replacement right away. Her payment options are 1) Nothing down and then 12 monthly payments of $80 (at the end of every month) for 1 year. 2) $90 down, no payments for the first year and then 12 monthly payments of $83.20100000000001 (round this number off to 2 decimals) at the beginning of each month starting exactly one year from today. 3) $866.32 in cash. The nominal interest rate is 9% compounded monthly a) If Shayla wants the cheapest price she should choose option (Answer is just 1,2 or 3) b) If Shayla wants the plan with the lowest monthly payment amount she should choose option c) If Shayla has only $100, is unemployed but expects to find work in the next 6 months, she should choose option (Pick the closest answer, ignore all the stupid extra decimal places.) d) What is the present value of option 2? (Click to select) (Click to select) 1041.3847344041296 959.7922242307028 966.3156659124331 876.3156659124331

Answer 1

a) In first case, total payment is $960,$1088.40 in second and $866.32 in third case which is the cheapest price, so she should choose the option 3.

b) Option 1 has lowest monthly payment at $80.

c) She has no option other than second one where she needs to pay $90 initially and rest after one year and that time she would have a job to pay for her fridge,so option 2.