star studios is looking to purchase a new building for its upcoming film productions. The company finds a suitable location that has a list price of $1,450,000. The seller gives Star Studio the following purchase options :

1. Pay $1,450,000 immediately.

2. Pay $450,00 immediately and then pay $135,00 each year over the next 10 years, with the first payment due in one year.

3. Make 10 annual installments of $175,000, with the first payment due in one year.

4. Make a single payment of $2,150,000 at the end of five years.

1-a determine the present value for each option assuming that the company can borrow funds to finance the purchase at 7%.

1-b. Which option is the lowest-cost alternative for star studions