Question 15 of 16A manufacturing firm purchased a heavy duty drilling machine. They were given two payment options:Option 1: Make a payment of $39,000 immediately to settle the invoice for the machine.Option 2: Make a payment of $23,500 immediately and the balance of $23,550 in 3 months to settle the invoice.If money is worth 7.12% compounded quarterly, answer the following:a. What is the total present value of Option 2?Round to the nearest centb. Which option is economically better for the manufacturing firm?Option 1Option 2

Option 1: Immediate payment of $39000 needed. Option 2: Immediate payment of $23500 and remaining…

Answered: A manufacturing firm purchased a heavy…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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