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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

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 $130,000 and therefore has the following payment options:
Payment Today Payment in One Year Total Payment
Option 1 $130,000 $ 0 $130,000
Option 265,00071,500136,500
Option 30149,500149,500
Required:
1-a. Assuming an annual discount rate of 12%, calculate the present value and the total cost.
1-b. Which option's cost has the lowest present value?

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