You are trying to decide between two mobile phone carriers. Carrier A requires you to pay​$185 for the phone and then monthly charges of​ $54 for 24 months. Carrier B wants you to pay ​$105 for the phone and monthly charges of ​$68 for 12 months. Assume you will keep replacing the phone after your contract expires. Your cost of capital is 3.9%​APR, compounded monthly. Based on cost​ alone, which carrier should you​ choose? The EAA for plan A isThe EAA for plan B isThe EAA for plan C is

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You are trying to decide between two mobile phone carriers. Carrier A requires you to pay​$185 for the phone and then monthly charges of​ $54 for 24 months. Carrier B wants you to pay ​$105 for the phone and monthly charges of ​$68 for 12 months. Assume you will keep replacing the phone after your contract expires. Your cost of capital is 3.9%​APR, compounded monthly. Based on cost​ alone, which carrier should you​ choose?

The EAA for plan A is
The EAA for plan B is
The EAA for plan C is



 

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