In September 1, 2009, the Little Broadway Players signed a note to raise cash to buy a theater. The terms of the note call for seven annual payments of $5,000 and an interest rate of 9 percent. However, because the Players are just starting this enterprise, the bank has agreed to defer the first of the seven payments until September 1, 2012.
How much cash will the bank loan the Little Broadway Players given the terms of this note?
ill Walters, your boss at Walters’s Waterbeds & Futons, has seen the zero percent interest advertising of other furniture stores and wants to use this promotion to attract new customers. Currently, her cost to buy a futon is $200 and she is selling them for $550. She is also charging 18 percent interest for customers who buy on credit. Jill wants to offer 24 months’ interest-free financing.
What price must she charge if she wants to maintain her current profit margin and still make 18 percent interest?
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