A farmer has just purchased a tractor for which he had to borrow $20,000. The bank has offered the following choice of payment plans determined using an interest rate of 8%. If the farmer's minimum attractive rate of return (MARR) is 15%, which plan should he choose? Plan A: $5,010 per year for 5 years Plan B: $29,56 per year for 4 years, plus $15,000 at the end of 5 years Plan C: Nothing for 2 years, the $9,048 per year for 3 years

A farmer has just purchased a tractor for which he had to borrow $20,000. The bank has offered the following choice of payment plans determined using an interest rate of 8%. If the farmer's minimum attractive rate of return (MARR) is 15%, which plan should he choose? Plan A: $5,010 per year for 5 years Plan B: $29,56 per year for 4 years, plus $15,000 at the end of 5 years Plan C: Nothing for 2 years, the $9,048 per year for 3 years

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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