Quote:
Originally Posted by Stev381  The thing is that it is "implied" (but very, very uncleary) that he won't be charged interest during the two months that he waits to make the payment. |
Can you highlight for us where in the following original problem statement was this "implied"?
Quote:
Originally Posted by Stev381 Smith Wishes to buy a TV set and is offered a time payment plan whereby he makes 24 monthly payments of 30 each starting now. Smith wants the payments to start in 2 months rather than now. If interest is at a one-month interest rate of 1%, what is the present value now of the savigs to Smith if the seller agrees to Smith's terms? |
Your original problem statement, as far as I can tell, contained no explicit provision, which says that Smith “won't be charged interest during the two months that he waits to make the payment.”
At any rate, I don’t think any sensible businessman would agree to Smith’s absurd offer of no interest for two months as you proposed. No interest (or rent) for two months despite the fact that the TV gets used for two months? To paraphrase Homey the clown: I don’t think so.
Any businessman would probably tell Smith to come back in two months instead when he has the first $30 down payment.