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As part of the refurbishment project, the Crystal Hotel would like to introduce fresh plants into the lobby area, function and conference rooms. The management has however, dilemma on whether to hire a professional company that will deliver the plants and maintain them or whether to purchase the plants themselves and hire a gardener for the maintenance of the plants. It is estimated that the plants would need to be replaced every three years. From experience, contracting a gardener to take care of the plants would cost the hotel $265 per week. For simplification, purposes assume the gardener's invoice is paid at the end of each year. The list of the required plants together with costing is included in the Appendix 2 of this document. The hiring contract requires payment at the beginning of the year for the full year. REQUIRED Compare the two options and make recommendation to the Hotel on whether to hire or purchase the plants. Take into account the time value of money at the discount rate of 9%. Include advantages and disadvantages of each option and justify your choice.BUY OPTION RENT OPTION Cost Discounted Discounted Discounted Discounted Discounted Discounted Servicing Servicing Total Cost Value Value Value Total Cost Year 0 Servicing over 3 years Year 1 Year 2 Year 3 over 3 years Year 1 Year 2 Year 3 Zamioculcas Zamiifolia (20 pieces) N/A N/A N/A Raphis Excelsa (10 pieces) N/A N/A N/A Howea Forsteriana (10 pieces) N/A N/A N/A Chamaedorea Elegant (30 pieces) N/A N/A N/A TOTALAPPENDIX 2 PLANTS REQUIREMENTS Zamioculca | Hire Price 12 months: $76 Zamiifolia (per item) (Zanzibar Gem) Quantity required: 20 | Purchase Price (per item): $40 Raphis Excelsa | Hire Price 12 months: $275 Quantity required: 10 (per item) Purchase Price (per item): $136 Howea Forsteriana | Hire Price 12 months: $199 (Kentia Palm) | (per item) Quantity required: 10 Purchase Price (per item): $57 Chamaedorea | Hire Price 12 months: $218 Elegant (per item) (ParlourPalm) Quantity required: 30 Purchase Price (per item): $66APPENDIX 5 Discount table Present value of $1 received in a periods of time (n) Periods 4% 5% 6% 8% 9% 10% 11% 12% 15% 0.961 54 0.952 38 0.943 40 0.925 93 0.917 43 0.909 09 0.900 90 0.892 86 0.869 57 0.924 56 0.907 03 0.890 00 0.857 34 0.841 68 0.826 45 0.811 62 0.797 19 0.756 14 0.889 00 0.863 84 0.839 62 0.793 83 0.772 18 0.751 22 0.731 19 0.711 78 0.657 52 0.854 80 0.822 70 0.792 09 0.735 03 0.708 43 0.683 01 0.658 73 0.635 52 0.571 75 0.821 93 0.783 53 0.747 26 0.680 58 0.649 93 0.620 92 0.593 45 0.567 43 0.497 18 0.790 31 0.746 22 0.704 96 0.630 17 0.596 27 0.564 47 0.534 64 0.506 63 0.432 33 0.759 92 0.710 68 0.665 06 0.583 49 0.547 03 0.512 16 0.481 66 0.452 35 0.375 94 0.730 69 0.676 84 0.627 41 0.540 27 0.501 87 0.466 51 0.433 93 0.403 88 0.326 90 0.702 59 0.644 61 0.591 90 0.500 25 0.460 43 0.424 10 0.390 92 0.360 61 0.284 26 10 0.675 56 0.612 91 0.558 39 0.463 19 0.422 41 0.385 54 0.352 18 0.321 97 0.247 19 11 0.649 58 0.584 68 0.526 79 0.428 88 0.387 53 0.350 49 0.317 28 0.287 48 0.214 94 12 0.624 60 0.556 84 0.496 97 0.397 11 0.355 54 0.318 63 D.285 84 0.256 68 0.186 91 13 0.600 57 0.530 32 0.468 84 0.367 70 0.326 18 0.289 66 0.257 51 0.229 17 0.162 53 14 0.577 48 0.505 07 0.442 30 0.340 46 0.299 25 0.263 33 0.231 99 0.204 62 0.141 23 15 0.555 26 0.481 02 0.417 27 0.315 24 0.274 54 0.239 39 0.209 00 0.182 70 0.122 89 16 0.533 91 0.458 11 0.393 65 0.291 89 0.251 87 0.217 63 0.188 29 0.163 12 0.106 87 17 0.512 37 0.436 30 0.371 26 0.270 27 0.231 07 0.197 85 0.169 63 0.145 64 0.092 93 18 0.493 63 0.415 52 0.350 34 0.250 25 0.211 99 0.179 86 0.152 82 0.120 04 0.080 81 19 0.474 64 0.395 73 0.330 51 0.231 71 0.194 49 0.163 51 0.127 68 0.116 11 0.070 27 20 0.456 39 0.376 89 0.311 80 0.214 55 0.178 43 0.148 64 0.124 03 0.103 67 0.061 10
