Assignment problem: Mr. Pedro Periplo, Transport Engineer, has decided to study a postgraduate degree in Mechanics, for which he asks you to guide him in the analysis of the financing alternatives he has, according to the following background:
- The postgraduate has a total value of $ 4,800,000 which can be canceled in 12 equal monthly installments, without interest.
- The University grants a discount for prompt payment consisting of a reduction of 5% of the total value of the postgraduate degree, if paid at one time at the time of enrollment.
Additional background:
- Mr. Periplo disposes to the momento of the tuition of $ 4,560,000 in cash which can be used to save or to pay for the postgraduate degree.
- Mr. Periplo, discounting all his expenses, generates a monthly surplus of $ 400,000 that can be used to pay for the postgraduate degree or savings, an amount that will not suffer variations within the next 24 months.
- Banco Falahorro offers its Deposit to Plazor star, which has a simple interest rate of 0.4% per month, a deposit whose amount is automatically renewed at the end of each month. Indicate to Mr. Periplo, using for all calculation purposes until month 12, if it is more convenient to pay the postgraduate degree at once at the time of registration or to pay the 12 installments.
For this, determine the following:
a) Amount of money that Mr. Periplo will have at the end of the 12th month for each alternative.
b) Select the alternative that will benefit Mr. Periplo the most considering as the only element of judgment the amount of money he will have at the end of month 12.