Directions
When Joe buys electronic appliances, such as dishwashers, computers, and televisions, he is often offered two payment choices:
- pay one price up front
- defer full payment by paying a smaller amount each month for a number of months.
Deferred payment plans may include additional fees or service charges. Sometimes these add-ons are flat fees; often they are percentages of the whole, like interest. Joe knows that the fees make the total cost of the item more expensive.
Before Joe chooses an option, he always computes exactly how much the appliance will cost under each plan.