Which of these alternatives should marty accept

Assignment Help Business Economics

Reference no: EM131807693

The Apex Company sold a water softener to Marty Smith. The price of the unit was $350. Marty asked for a deferred payment plan, and a contract was written. Under the contract, the buyer could delay paying for the water softener if he purchased the coarse salt for recharging the softener from Apex. At the end of 2 years, the buyer was to pay for the unit in a lump sum, with interest at a rate of 1.5% per quarter-year. According to the contract, if the customer ceased buying salt from Apex at any time prior to 2 years, the full payment due at the end of 2 years would automatically become due. Six months later, Marty decided to buy salt elsewhere and stopped buying from Apex, whereupon Apex asked for the full payment that was to have been due 18 months hence. Marty was unhappy about this, so Apex offered as an alternative to accept the $350 with interest at 10% per semiannual period for the 6 months that Marty had been buying salt from Apex. Which of these alternatives should Marty accept? Explain.

Reference no: EM131807693

Questions Cloud

Discuss about the npv decision rule for a firm : At a required return of 11 percent, should the firm accept this project? What if the required return is 24 percent?

Discuss why is eps so important to investors : Do you feel this is the most important measurement of a company

Bonds from a struggling foreign nation : The U.S. recently purchased $1 billion of 30-year zero-coupon bonds from a struggling foreign nation. The bonds yield 41/2% per year interest.

Describe data items information and knowledge : Describe data items, information, and knowledge, providing a clear example of how HPC would use each of these during the conduct of its business

Which of these alternatives should marty accept : The Apex Company sold a water softener to Marty Smith. The price of the unit was $350. Marty asked for a deferred payment plan, and a contract was written.

Compute how much extra income the garbage company : Compute how much extra income the garbage company could earn each year if it invests the money as described by the newspaper

What is the breakeven point in units and sales dollars : What is the breakeven point in units and sales dollars?A firm has the following projections for 2017: sales of 13,000 units at a selling price of $42;

Define similarities and differences in the funds returns : Nicholas Grammas is an investment analyst examining the performance of two mutual funds with Janus Capital Group: The Janus Balanced Fund.

What is monthly loan payment : He pays for the car in 30 equal monthly payments with interest at 12% per annum, compounded monthly. What is his monthly loan payment?

User Account

All Pages