Calculate the present value of the payments

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Reference no: EM131999167

A store offers two payment plans. Under the installment plan, you pay 20% down and 20% of the purchase price in each of the next 4 years.

If you pay the entire bill immediately, you can take a 5% discount from the purchase price.

a. Calculate the present value of the payments, if you can borrow or lend funds at a 4% interest rate. Assume the product sells for $100. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value $

b. Calculate the payment net of discount.

Payment net of discount $

Reference no: EM131999167

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