The Apex Company sold a water softener to MartySmith. The

Chapter , Problem 3-65

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The Apex Company sold a water softener to MartySmith. The price of the unit was $350. Marty askedfor a deferred payment plan, and a contract was writ-ten. Under the contract, the buyer could delay payingfor the water softener if he purchased the coarse saltfor recharging the softener from Apex. At the end of2 years, the buyer was to pay for the unit in a lumpsum, with interest at a rate of 1.5% per quarter-year.According to the contract, if the customer ceasedbuying salt from Apex at any time prior to 2 years,the full payment due at the end of 2 years wouldautomatically become due.Six months later, Marty decided to buy saltelsewhere and stopped buying from Apex, where-upon Apex asked for the full payment that was tohave been due 18 months hence. Marty was unhappyabout this, so Apex offered as an alternative to acceptthe $350 with interest at 10% per semiannual periodfor the 6 months that Marty had been buying saltfrom Apex. Which of these alternatives should Martyaccept? Explain.