Vern's furniture is offering "1 Year same as cash" financing on all Lay-Z boy recliners. If you pay cash today, you can get a 12% discount, but if you want to get "Free" credit, you can pay the full price in one year. Your favorite recliner has a sticker price of $2,500. ------- Make a cash flow table illustrating the cash flows associate with your purchase, calculate the differential cash flows and the EAIR on the "free financing". What's the effective annual interest rate? ------ Your brother tells you that free financing is never free. He offeres to loan you the money for 11% interest per year, with interest compounded monthly. You could borrow the money from him now, and pay it back with interest at the end of the year. What is the EAIR of your brothers loan? Should you take you brothers loan or the dealers free financing? (I need formulas using formula text for direction) Thanks!!! Imma try it and hopfully I get what you do.