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A Model of the Net Present Value of “Zero-Interest” Instalment Schemes

Mihir Dash () and Teja Motukuri
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Teja Motukuri: ICICI Bank, India

Journal of Applied Management and Investments, 2018, vol. 7, issue 4, 179-184

Abstract: This study proposes a model for ‘zero-interest’ instalment schemes in terms of the net present value for the financial institutions and for the consumers. The proposed model is especially of use for the consumers, allowing them to assess the affordability of the scheme in terms of the amount of down-payment that they have to immediately pay, the period over which they can spread the payments, and their resultant savings. The model also suggests a simple process for financing institutions and consumers to select a scheme to optimise their respective net present values.

Keywords: ‘zero-interest’ instalment schemes; net present value; optimisation (search for similar items in EconPapers)
JEL-codes: D14 G21 L68 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:ods:journl:v:7:y:2018:i:4:p:179-184