Adele Doesn't Like to Wait to Purchase Items That She

Multiple Choice

Adele doesn't like to wait to purchase items that she wants, but Agnes prefers to pay for things she wants in full. They are both planning on buying a video game system. The store is running an offer that consumers can buy the system for $400 or pay $120 per month for four months. Either choice allows the consumer to leave the store with the video game system. Using the discount rate of 2% per month, a consumer would be better off by _____ because _____.

A) paying once; the net present value of financing is greater than $400
B) paying once; the net present value of financing is less than $400
C) paying over four months; the net present value of financing is greater than $400
D) paying over four months; the net present value of financing is less than $400