What is the economic advantage

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Question - A furniture store is advertising television sets for 25% down and no interest on the balance, which is payable in a lump amount six months after the date of sale. When asked what discount would be given for cash payment on an $1195 set, the sales clerk offered $30. If you can earn 5% compounded monthly on short-term funds:  

a) Should you pay cash and take the discount, or purchase the set on the advertised terms?  

b) What is the economic advantage, in today's dollars, of the preferred alternative?

Reference no: EM133182430

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