You can purchase a residential building lot for $90,000 cash, or for $20,000 down and quarterly payments
Question:
You can purchase a residential building lot for $90,000 cash, or for $20,000 down and quarterly payments of $5000 for four years. The first payment would be due three months after the purchase date. If the money you would use for a cash purchase can earn 8% compounded quarterly during the next four years, which option should you choose? What is the economic advantage in current dollars of the preferred alternative?
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