1. How do you calculate the present value of the monthly instalments under the credit option. please explain like when i buy furniture for instance? Based on your example calculation of the present value, which option will be better – the cash or credit option how to interpreted?
2. A recent graduate who has just started working is making plans to pay back the $258 000 in student loans he accumulated during the course of his studies. The terms of the student loans stipulate that he will be required to pay back the loan and interest over a period of five years upon completion of his studies. The interest on the student loansis 11.25% per annum. Construct an amortization schedule for the graduate if equal payments are required at the end of each year.