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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
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 $ The seller gives Star Studios the following purchase options: FV of $ PV of $ FVA of $ and PVA of $Use tables, Excel, or a financial calculator. Round your answers to decimal places.
Pay $ immediately.
Pay $ immediately and then pay $ each year over the next years, with the first payment due in one year.
Make annual installments of $ with the first payment due in one year.
Make a single payment of $ at the end of five years.
a Determine the present value for each option assuming that the company can borrow funds to finance the purchase at
b Which option is the lowestcost alternative for Star Studios?
multiple choice
Option
Option
Option
Option
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