A furniture store is offering free credit on purchases of over $1,000. You observe that a
plasma TV can be purchased for nothing down and $4,000 due in one year. The store next
door offers an identical television for $3,650, but does not offer credit terms. Which
statement below best describes the “free” credit?
A. The “free” credit costs about 8.75 percent
B. The “free” credit costs about 9.13 percent
C. The “free” credit costs about 9.59 percent
D. The “free” credit costs about 21.67 percent
E. The “free” credit effectively costs zero percent