Tutorial 2

# Tutorial 2 - Tutorial 2 We are planning to solve first 5...

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Tutorial 2 We are planning to solve first 5 questions in this tutorial.

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#1 Netlink, a satellite TV service provider, sells its Movie a monthly or an annual contract . If the package is bought on a monthly basis, it costs \$39.95 per month. However, if it is bought on an annual basis, then the price is \$439.95 paid at the end of the year. If you plan to subscribe to this service for one year, which payment option would you choose and why? (Assume the interest rate is 12% per year, compounded monthly).
#2 ( Problem 1 continued ): What  is  the  present  worth  of  the  monthly  contract?

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#3 A retailer offers financing on a \$3400 home theatre system over a period of 2 years at a nominal interest rate of 24%, compounded monthly. How much are your monthly payments if you provide a down payment of \$500?
#4 Maintenance on new equipment is expected to  cost \$1000 in each of the first two years, when  it  is  under  warranty,  and  \$5000  in  the  third

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Tutorial 2 - Tutorial 2 We are planning to solve first 5...

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