Answer to Question #288810 in Other for Korea

Question

What is the present value of K5, 000 if the interest rate or discount rate is 7% per year for a period of? a. One year b. Two c. Three 6) Assuming you want to buy home furniture costing K15, 000 and the supplier has given you two payment plan options. Option one requires you to pay the entire amount now and option two entering into an instalment plan where you pay K7,000 down today and make payments of K4,500 in each of the next two years. Assume that the interest rate you can earn on safe investments is 10%. Which option is cheaper?

Answer 1

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