SOLUTION: Please anyone I need your help A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price in each of the next 3 years. If yo

Question 349244: Please anyone I need your help

A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price in each of the next 3 years. If you pay the entire bill immediately, you can take a 10% discount from the purchase price.
Which is a better deal if you can borrow or lend funds at a 5% interest rate?
Answer by josmiceli(19441) (Show Source): You can put this solution on YOUR website!
I'll say the purchase price is
Installment plan:
25% down leaves left to pay off in 3 years
Entire bill plan:
You pay 90% of the bill immediately
---------------------
The 2nd plan puts in your pocket immediately
With the 1st plan, you can invest at 5% the 1st
year, which is
The 2nd year, you have to invest at 5%, which is

The 3rd year, you have to invest at 5%, which is

Adding these for the 3 years, I get
This looks like the 2nd plan wins, since
is greater than
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