Lights, Camera, and More sells filmmaking equipment. The company offers three purchase options: 1) pay...
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Lights, Camera, and More sells filmmaking equipment. The company offers three purchase options: 1) pay full cash today, (2) pay one-half down and the remaining one-half plus 10% in one year, or 3) pay nothing down and the full amount plus 15% in one year. George is considering buying equipment from Lights, Camera, and More for $130,000 and therefore has the following payment options Payment in One Year 0 71,500 149,500 Payment Today $130,000 Option 1 Option 2 Option 3 Total Payment $130,000 136,500 149,500 65,000 Required 1-a. Assuming an annual discount rate of 12%, calculate the present value and the total cost. (FV of $1 PV of $1 FVA of $1, and PVA of $1 (Use appropriate factor(s) from the tables provided. Round your answers to 2 decimal places.) Present Value of Payment in One Year Total Present Value (or Total Cost) Option 1 Option 2 Option 3 1-b. Which option has the lowest total cost in present value terms? Option1 O Option 2 Option 3 References eBook & Resources Worksheet Difficulty: 2 Medium Learning Obiective: C-02 Calculate the future value and present value of a single
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