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 $85,000 and therefore has the following payment options:

	Payment Today	Payment in One Year	Total Payment
Option 1	$ 85,000	$ 0	$ 85,000
Option 2	42,500	46,750	89,250
Option 3	0	97,750	97,750

Required:

1-a. Assuming an annual discount rate of 11%, calculate the present value and the total cost.

1-b. Which option's cost has the lowest present value?

Assuming an annual discount rate of 11%, calculate the present value and the total cost. Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1, and PVA of $1)

	Payment Today	Present Value of Payment in One Year	Total Present Value (or Total Cost)
Option 1
Option 2
Option 3