Los Angeles County Hospital is planning to purchase a new piece of medical equipment with a list price of $3,000,000. The medical equipment supplier presents County with two offers:

Offer 1: County can purchase the medical equipment at a 10% discount off the list price, but it must pay the final (post-discount) price today.

Offer 2: County can purchase the medical equipment at a 5% discount off the list price with two-year, no-cost financing. Under this offer, half of the final (post-discount) price must be paid at the end of year 1, and the remaining half must be paid at the end of year 2.

a. Which offer should County accept if their estimate of the opportunity cost rate is 10%?

b. Which offer should County accept if their updated estimate of the opportunity cost rate is 1%?