Dorothy lacks cash to pay for a $840.00 dishwasher. She could buy it from the store on credit by making 12 monthly payments of $71.52. The total cost would then be $858.24. Instead, Dorothy decides to deposit $70.00 a month in the bank until she has saved enough money to pay cash for the dishwasher. One year later, she has saved $882.00—$840.00 in deposits plus interest. When she goes back to the store, she finds the dishwasher now costs $886.20. Its price has gone up 5.50 percent. Was postponing her purchase a good trade-off for Dorothy?

Dorothy lacks cash to pay for a $840.00 dishwasher. She could buy it from the store on credit by making 12 monthly payments of $71.52. The total cost would then be $858.24. Instead, Dorothy decides to deposit $70.00 a month in the bank until she has saved enough money to pay cash for the dishwasher. One year later, she has saved $882.00—$840.00 in deposits plus interest. When she goes back to the store, she finds the dishwasher now costs $886.20. Its price has gone up 5.50 percent. Was postponing her purchase a good trade-off for Dorothy?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 47P

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