the additional month of interest (note that the problem specifies 2% simple interest per month)? As a professional photographer, Marion has seen the trend away from film cameras as customers purchase low-end digital cameras and printers in order to avoid processing fees associated with film-based cameras. She would like to offer a new service to customers by offering superior quality digital printing using advanced pigment inks to produce high-quality color prints. In order to offer this service, Marion will need to invest in a state-of-the-art photo printer through her photography supply company at a list price of $7,895, plus sales tax of 7.25%. The supply company is offering cash terms of 3/15, n/30 with a 2.5% service charge on late payments, or 90 days “same as cash” financing if Marion is approved for a company credit card. They also offer a payment plan (for the purchase price and the sales tax) at 23% annual simple interest for the first 90 days, plus 2% simple interest per month on the unpaid balance after 90 days.

She calls the supply company to inquire about the terms and makes some notes:

- 3/15 means 3% discount (only on the price, not the sales tax) if paid within 15 days of purchase
- n/30 with 2.5% service charge on late payments means she can pay the cash price until 30 days, or cash price plus 2.5% after 30 days
- 90 days “same as cash” means that if she applies for and is approved for a company credit card, she can pay the cash price up to 90 days after purchase.

a. (5 points) If Marion takes the cash option and pays for the printer within the 15 day discount period, how much will she save?
Answer:

b. (5 points) If she takes the 90 days same as cash option and purchases the printer on December 20, using exact time, what is her deadline for paying no interest in a non-leap year? How about in a leap year? [Find using exact time]
Answer – Non-Leap Year:

Answer - Leap Year:

c. (5 points) If Marion takes the 90 days “same as cash” option and pays within 90 days, compute the amount of ordinary interest she owes? If she can’t pay until April 20, what would her payoff be including

Answer:

d. (10 points) Marion’s uncle works at a local bank and offers to get her a 90-day promissory note for $8,500 at 8% annual simple interest. Is this enough money for Marion to cover the purchase price of the printer?

a. To calculate the amount Marion will save by taking the cash option and paying within the 15-day discount period, we first need to calculate the discount. The discount is 3% of the purchase price, which includes the printer price and the sales tax.

Discount = 3% of ($7,895 + 7.25% sales tax)

To find the sales tax, we multiply the purchase price by the sales tax rate:

Sales Tax = 7.25% of $7,895

Next, we add the sales tax to the printer price:

Total Purchase Price = $7,895 + Sales Tax

Finally, we can calculate the discount:

Discount = 3% of Total Purchase Price

The amount Marion will save is equal to the discount.

b. To find Marion's deadline for paying no interest if she takes the 90 days same as cash option, we need to calculate the exact time.

In a non-leap year, Marion purchases the printer on December 20, and she has 90 days to pay with no interest. We need to calculate the date 90 days after December 20.

To calculate the deadline, we add 90 days to December 20:

Deadline - Non-Leap Year = December 20 + 90 days

In a leap year, the deadline will be different since there is an additional day in February. We need to calculate the date 90 days after December 20, taking into account the leap year.

To calculate the deadline, we add 90 days to December 20, but we also need to check if February 29 is included or not:

Deadline - Leap Year = December 20 + 90 days + 1 day (if February 29 is included)

c. If Marion takes the 90 days same as cash option and pays within 90 days, she owes no ordinary interest. The "same as cash" option means there is no interest charged if Marion pays within the 90-day period.

If Marion can't pay until April 20, we need to calculate the amount of interest she owes. After the 90-day period, Marion will be charged 2% simple interest per month on the unpaid balance.

To calculate the amount of ordinary interest Marion owes, we first need to calculate the unpaid balance. This is the total purchase price minus any payments made within the 90-day period.

Unpaid Balance = Total Purchase Price - Payments Made within 90 days

Then, we calculate the interest owed using the unpaid balance and the interest rate:

Interest Owed = 2% of Unpaid Balance

To find the payoff including interest, we add the unpaid balance and the interest owed to the 90-day total:

Payoff = Unpaid Balance + Interest Owed

d. To determine if the promissory note of $8,500 at 8% annual simple interest is enough to cover the purchase price of the printer, we need to compare the note amount to the total purchase price.

The total purchase price includes the printer price and the sales tax:

Total Purchase Price = $7,895 + Sales Tax

If the promissory note amount is greater than or equal to the total purchase price, it is enough to cover the purchase. Otherwise, it is not enough.