Question

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 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?

Answer 1

Real cost of the tv= $1104

Step-by-step 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