SOLUTION: A DVD player can be purchased for $1500 down and $500 a month for 18 months. What is the equivalent price if the DVD player is purchased for cash? Assume that the interest rate on

Question 1032183: A DVD player can be purchased for $1500 down and $500 a month for 18 months. What is the equivalent price if the DVD player is purchased for cash? Assume that the interest rate on credit is 15% compounded monthly.
Answer by robertb(5830) (Show Source): You can put this solution on YOUR website!
Equivalent price = down payment + present value of all monthly payments.
Now present value of all monthly payments = .
Here, n = 12, t = 1.5, r = 0.15, R = 500.
==> .
==> Equivalent price = 1500 + 8014.77 = $9,514.77.
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