Question

Three-part Question: Part A - Dell computer has two promotions to sell its $3,000 laptop computers....

Three-part Question:


Part A - Dell computer has two promotions to sell its $3,000 laptop computers. One promotion is the low interest rate loan (the nominal annual interest rate is 1.2% for 2 years, monthly compounding) and the other one is the cash rebate. Two promotions should be indifferent for the buyers. If John chose to apply for the 1.2% amortized loan (2 years, monthly payments) to buy the computer, what's his monthly payment?
A. $144.61
B. 126.57
C. 1527.05
D. 251.63

Part B - Based on the Dell computer promotion, if Smith chose to pay cash at one time and get cash back. How much should he actually pay to buy the computer? If we assume the current market rate i = 9%
A. 3,000
B. 2,578.54
C. 2,688.78
D. $2,770.50

Part C - If Company A offers a similar laptop as Dell computer stated in Question 8, but has a different sales promotion (10% discount for the original sales price $3,000). Which laptop do you prefer to buy?
A. The laptop from Dell
B. The laptop from Company A

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