Deciding whether to pay cash or finance a purchase. Use Worksheet 7.2. Matilda Edwards wants to by a home entertainment center. Compete with a big-screen TV DVD, and sound system the unit would cost $4500. Matilda has over $15,000 in a money market fund, so she can easily afford to pay cash for the whole thing ( the fund is currently paying 3 percent interest, and Matilda expects that yield to hold for the foreseeable future). To stimulate sales, the dealer is offering to finance the full cost of the unit with 36-month, simple interest installment loan at 6 percent.
