Calculate the net present value of the loan

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Reference no: EM13263574

Terry Martinez is considering taking out a loan to purchase a desk. The furniture store manager rarely finances purchases, but will for Terry "as a special favor." The rate will be 10% per year, and because the desk costs $600, the interest will come to $60 for a one-year loan. Thus, the total price is $660, and Terry can pay it off in 12 installments of $55 each.
Use the interest rate of 10% per year to calculate the net present value (NPV) of the loan?

Based on this interest rate, should Terry accept the terms of the loan.

Reference no: EM13263574

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