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You are the controller for Sheridan's Pizzeria Inc. (SPI). Sheridan is contemplating the purchase of a new commercial pizza oven in his popular Southern Ontario
You are the controller for Sheridan's Pizzeria Inc. (SPI). Sheridan is contemplating the purchase of a new commercial pizza oven in his popular Southern Ontario pizzeria and is asking for your assistance in making his decision. From the options presented by his creditor, he has narrowed down his options as follows: Option 1: Purchase the pizza oven with payments of $10,300 made semi-annually for 3 years. The interest rate on this arrangement is 6% Option 2: Purchase the pizza oven with annual payments for 3 years of $22,100 at 7% interest. For each of the two option, using tables, a financial calculator or Excel function determine from a quantitative perspective, which of the two options should be pursued by Sheridan? (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answers to 2 decimal places, e.g. 5,275.25.) Click here to view Table A.4 - PRESENT VALUE OF AN ORDINARY ANNUITY OF 1
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