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What is the correct formula for solving this problem? Donald found two feasible options for an apartment to rent for the next 2 years. Option
What is the correct formula for solving this problem?
Donald found two feasible options for an apartment to rent for the next 2 years. Option A requires monthly rent of $1,350 to be paid at the beginning of each month. Option B allows for end-of-month rent payments of $1,350 (same amenities as in option A). Donald uses a fairly high annual discount rate of 24% (sadly, he is also a high credit risk). Find the PV of the future rent payments for both options over the 2-year time period and explain which one Donald will prefer, if he bases his decision strictly on cash flow. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places e.g. 5,125.36.) Click here to view the factor table Donald would choose , because he would effectively be paying in rent over this two-year periodStep by Step Solution
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