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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 remaining
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 $140,000 and therefore has the following payment options:
payment today | payment in 1 year | total payment | |
option 1 | 140,000 | 0 | 140,000 |
option 2 | 70,000 | 77,000 | 147,000 |
option 3 | 0 | 161,000 | 161,000 |
Assuming an annual discount rate of 10%, calculate the present value and the total cost.
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