Question 6 fof 20 5a25 Tme remeining 33909 6. 047 ports LO ts. Camera. and More
ID: 2566767 • Letter: Q
Question
Question 6 fof 20 5a25 Tme remeining 33909 6. 047 ports LO ts. Camera. and More sells Immak ng eq pment. The compan omers ree purchase optio s (1 pav ull cash today, 2 oavone-half do uying eqapent from Lighls, Camera, ant Mare for 513m,c:o and theee hs the tallowing payment aptian andre remaining one-half plus 10% n one veer, or 3 oa nothing on a dlhe full amount plus 159 n one vear George s considen Payment in Ons Year Payment Toda $130000 Total Paymant Option Option 2 Option 3 $130,000 135500 65000 149,500 Required Assumir an nnnal d Rnurt at of 17%, rakilate the present value and the tntal rnst FV ot $1 PV ct S1 F A ct S1 anrt PVA nt $1 use a propr to tactor s trom the tablas prov ded. Round your answers to 2 daclmal pla Payment in One Value (or lotal Opton 2 Opton 3 Book & Resourcos Worksheet Dimicuity: 2 Modium g Objocthe C-02 Callculate the future value and prosent valuc of a single amount 118 20Explanation / Answer
Answer:
1-a
Value of payment in one year
PV factor @12%
Present value of payment in one year
Payment today
Total present value
Option 1
0
0.893
0
130000
130000
Option 2
71500
0.893
63849.50
65000
128849.50
Option 3
149500
0.893
133503.50
0
133503.50
1-b
Option 2 has lowest total cost in present value terms.
Value of payment in one year
PV factor @12%
Present value of payment in one year
Payment today
Total present value
Option 1
0
0.893
0
130000
130000
Option 2
71500
0.893
63849.50
65000
128849.50
Option 3
149500
0.893
133503.50
0
133503.50
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