Question 3 You've been considering purchasing a large-screen television for your home. During vi electronics retailer you've identified the one that you think is right for you. You are no choice of payment methods that are available to you: Method 1 The advertised price is $6,000 but there is a "Zero Percent Finance" offe has advertised, requiring you to pay a 10% deposit followed by 18 mont of $300. Method 2 Although the advertised price of the TV is $6,000, the shop assistant ha
Question 3 You've been considering purchasing a large-screen television for your home. During vi electronics retailer you've identified the one that you think is right for you. You are no choice of payment methods that are available to you: Method 1 The advertised price is $6,000 but there is a "Zero Percent Finance" offe has advertised, requiring you to pay a 10% deposit followed by 18 mont of $300. Method 2 Although the advertised price of the TV is $6,000, the shop assistant ha
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Question 3
You've been considering purchasing a large-screen television for your home. During visits to your local
electronics retailer you've identified the one that you think is right for you. You are now thinking about a
choice of payment methods that are available to you:
Method 1
The advertised price is $6,000 but there is a "Zero Percent Finance" offer that the shop
has advertised, requiring you to pay a 10% deposit followed by 18 monthly payments each
of $300.
Method 2
Although the advertised price of the TV is $6,000, the shop assistant has indicated he
might be willing to "do a deal" for only $5,400 if you can pay cash.
Your bank has agreed to let you “top up" your mortgage to purchase this TV and is currently offering a
loan with a fixed rate of 5% p.a. The loan is repayable in 18 equal monthly instalments.
Explain and demonstrate numerically which of the two alternative methods is most advantageous for
you to use.
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