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jeyben [28]
3 years ago
8

The local electronics store is offering a promotion​ "1-year: same as​ cash," meaning that you can buy a TV​ now, and wait a yea

r to pay​ (with no​ interest). So, if you take home a $ 1 comma 150 TV​ today, you will owe them $ 1 comma 150 in one year. If your bank is offering 4 % ​interest, what is the true cost of the TV to you​ today?
Business
1 answer:
Xelga [282]3 years ago
8 0

Answer:

Real cost of the tv= $1104

Explanation:

Giving the following information:

You can buy a TV​ now, and wait a year to pay​ (with no​ interest).

So, if you take home a $ 1,150 TV​ today, you will owe them $ 1,150 in one year.

Your bank is offering 4 % ​interest, you can lend the $1,150 to the bank and profit from the interest generated.  

We need to use the following formula:

FV= PV*(1+i)^n

FV= Final value

PV= present value

i= interest rate

n= number of years

FV= 1150*(1.04)^1= $1196

Real cost of the tv= 1150- 46= $1104

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