[HW 4.3d] Implied Loans

AT&T sells the current iPhone for a subsidized price of about $300 ($199 + 40 + tax on $650 is about $300) if you sign up for a 24 month commitment at $80 per month for a 3GB plan.

T-mobile sells essentially the same device for $700 ($650 plus tax).  If you bring your own device, T-mobile will charge you $60 for a comparable 3GB plan with no commitment.

Assuming T-Mobile’s service is as good as AT&T’s (no comment as to whether that’s true), what is the interest rate associated with AT&T’s implied loan?


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