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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
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 $55,000 and therefore has the following payment options: Payment Today $55,000 Payment in One Year Total Payment 27,500 $ 0 30,250 $55,000 57,750 Option 3 0 63,250 63,250 Option 1 Option 2 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? Complete this question by entering your answers in the tabs below. Req 1A Req 18 Assuming an annual discount rate of 11%, calculate the present value and the total cost. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) Payment Today Present Value of Payment in One Year Total Present Value (or Total Cost) Option 11 $ 55,000 $ 0 $ 55,000.00 Option 2 27,500 Option 31 0
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