Pay for phone and interest rate on your saving account

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Reference no: EM131817768

To purchase an Iphone 4 with 16GB memory in 2013 without locking-in any phone plan you have two options: 1) Buy at Wal-Mart on the spot with a discounted price of $549. 2) Buy at T-Mobile with a 2-year 0% APR ?nance, where the monthly payment is $26.

(a) Suppose that you do have money to pay for the phone and the interest rate on your saving account is 0.2%. Which is a better deal for you? Why?

(b) Suppose that you don’t have money to pay for the phone right now. You could put it on your credit card with 12% APR. Which is a better deal for you? Why?

Reference no: EM131817768

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