Question

# Corrie bought a new flat screen 70 inch television and a speaker system from a local electronics store on credit. The store will charge 12% per year compounded monthly. Their monthly payments are $174. 80 for 3 years. What is the cash price of her purchase?.

Answer

The present value of an annuity is equivalent to the cash price and yields a value of $5262.79. To calculate the present value of an annuity, we utilize the formula: PV = C . [1 - (1+i)⁻ⁿ] / i. In this situation, the cash flow per period is $174.80, which is compounded annually by an interest rate of 12%. To establish the monthly interest rate, we need to divide by 12, equaling 0.01. Given that the payment duration is 3 years, the total number of periods is 36. By inputting these parameters into the present value formula, the cash price equals $5262.79. Discover more about annuities at brainly.com/question/24244579 #SPJ4.