If your bank is offering 3.8% interest, what is the true cost of the TV to you today?

sophiottebar

sophiottebar

Answered question

2022-12-19

The local electronics store is offering a promotion "1-year: same as cash," meaning that you can buy a TV now, and wait a year to pay (with no interest). So, if you take home a $1,100 TV today, you will owe them $1,100 in one year. If your bank is offering 3.8% interest, what is the true cost of the TV to you today?
The true cost of the TV to you today is $______ (Round to the nearest cent.)

Answer & Explanation

Serenity Mason

Serenity Mason

Beginner2022-12-20Added 4 answers

Considering the offer, the buyer should take the TV home and should wait for a year to pay. As the bank offers interest of 3.8%. The buyer can deposit the amount in bank and can earn the interest over it. Thus, net cost of TV will be present value of cost of TV discounted by 3.8%.
Cost of TV  = $ 1 , 100 ( 1.038 ) = $ 1059.73
Thus, Cost of the TV is $ 1059.73

Do you have a similar question?

Recalculate according to your conditions!

Ask your question.
Get an expert answer.

Let our experts help you. Answer in as fast as 15 minutes.

Didn't find what you were looking for?