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(c) Judy Thomas has a $2,800 overdue debt for medical books and supplies at Joe's Bookstore. She has only $450 in her checking account and
(c) Judy Thomas has a $2,800 overdue debt for medical books and supplies at Joe's Bookstore. She has only $450 in her checking account and doesn't want her parents to know about this debt. Joe's tells her that she may settle the account in one of two ways since she can't pay it all now: 1. Pay $450 now and $1,020 when she completes her residency, 3 years from today 2. Pay $2,600 one year after completion of residency, 4 years from today Assuming that the cost of money is the only factor in Judy's decision and that the cost of money to her is 7% which alternative should she choose? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458 581.) (Use the below table.) TABLE 3 Present Value of 1 Periods 4% 5% 6% 7% 8% 10% 11% 12% 15% 96154 95238 94340 09345892593 91743 90909 90090 89286 86957 92456 90703 8900 0.87344 857348416882645 81162 79719 75614 88900 86384 83962 081630 79383 7721825132 73119 71178 65752 .85480 82270 79209 076290735037084368301 65873 63552 57175 82193 .78353 74726 071299680586499362092 59345 56743 49718 79031 74622 70496 0,66634 630175962756447 53464 50663 43233 7 75992 71068 66506 0.62275 58349547035131648166 45235 37594 970259 64461 59190 054393 50025460434241039092 36061 284 73069 67684 62741 0582015402701874665143393 40388 32690 67556 61391 55839 050835463194224138554 35218 32197 24719 64958 58468 52679 04750942888 38753135049 3172828748 21494 62460 55684 49697 044401397113555431863 28584 25668 18691 60057 53032 46884 0414936770 32618 28966 25751 22917 1625 57748 50507 44230 038782 340462992526333 23199 20462 14133 12 13 14
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