Your firm is considering the purchase of a new office phone system. You can either pay $32,000

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Your firm is considering the purchase of a new office phone system. You can either pay $32,000 now, or $1000 per month for 36 months.

a. Suppose your firm currently borrows at a rate of 6% per year (APR with monthly compounding).

Which payment plan is more attractive?

b. Suppose your firm currently borrows at a rate of 18% per year (APR with monthly compounding).

Which payment plan would be more attractive in this case?

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Corporate Finance

ISBN: 9780137845071

6th Edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Jun 12, 2024 01:03 AM

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Your firm is considering the purchase of a new office phone system. You can either pay $32,000

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Corporate Finance

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