Pam decides to have a small building constructed in her backyard and hires a contractor to do this for her. The cost of the project will be $24,000. Since this is a substantial amount, Pam and the contractor agree that she will pay the contractor monthly over the course of 3 years and that the contractor will charge interest of 4% APR. Pam pays exactly the monthly payment she is supposed to each month. For her very last payment, the contractor makes a mistake and sends her a bill for half of what it should be. A friend tells Pam that she knows a contractor who would have completed the job for much less than $24,000. (a) Find Pam's monthly payment. (b) Find the amount of the last bill the contractor sent. (c) Should Pam pay the bill as it was sent or pay the full amount as she had been over the past three years?
Pam decides to have a small building constructed in her backyard and hires a contractor to do this for her. The cost of the project will be $24,000. Since this is a substantial amount, Pam and the contractor agree that she will pay the contractor monthly over the course of 3 years and that the contractor will charge interest of 4% APR. Pam pays exactly the monthly payment she is supposed to each month. For her very last payment, the contractor makes a mistake and sends her a bill for half of what it should be. A friend tells Pam that she knows a contractor who would have completed the job for much less than $24,000. (a) Find Pam's monthly payment. (b) Find the amount of the last bill the contractor sent. (c) Should Pam pay the bill as it was sent or pay the full amount as she had been over the past three years?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 43P
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Knowledge of the role of ethics in mathematical pursuits.
Pam decides to have a small building constructed in her backyard and hires a contractor to do this for
her. The cost of the project will be $24,000. Since this is a substantial amount, Pam and the contractor
agree that she will pay the contractor monthly over the course of 3 years and that the contractor will
charge interest of 4% APR. Pam pays exactly the monthly payment she is supposed to each month. For
her very last payment, the contractor makes a mistake and sends her a bill for half of what it should
be. A friend tells Pam that she knows a contractor who would have completed the job for much less
than $24,000.
C IC
W
(a) Find Pam's monthly payment.
(b) Find the amount of the last bill the contractor sent.
(c) Should Pam pay the bill as it was sent or pay the full amount as she had been over the past
three years?
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