<PRE><B>Question 1105019</B>
if i understand this correctly, he put 6000 down and then made payments of 3500 at the end of each quarter for 2 and 1/2 years.


the annual interest rate is 8% / 100 = .08 per year.


the quarterly interest rate is .08 / 4 = .02 per quarter.


to find the equivalent cash price of the appliance, you have to find the present value of the payments at 2% per quarter.


time point 0 is when he made the purchase
time point 0 is the beginning of the first quarter.


time point 1 is the end of the first quarter.
time point 2 is the end of the second quarter.
etc.


you have 10 quarters.


at time point 0, you shell out 6000.
at time points 1 through 10, you shell out 3500.


the present value of these cash flows is the equivalent cash price of the appliance.


the following excel spreadsheet shows the individual calculations.


&lt;img src = &quot;http://theo.x10hosting.com/2017/121804.jpg&quot; alt=&quot;$$$&quot;&gt;


the sum of the present value of the cash flow at an interest rate of .02 perquarter is the equivalent cash price of the appliance.


that would be $43,013.69.











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