A manufacturing firm purchased a heavy duty drilling machine. They were given two payment options: Option 1: Make a payment of $34,000 immediately to settle the invoice for the machine. Option 2: Make a payment of $22,000 immediately and the balance of $23,550 in 3 months to settle the invoice. If money is worth 4.12% compounded quarterly, answer the following:
A manufacturing firm purchased a heavy duty drilling machine. They were given two payment options: Option 1: Make a payment of $34,000 immediately to settle the invoice for the machine. Option 2: Make a payment of $22,000 immediately and the balance of $23,550 in 3 months to settle the invoice. If money is worth 4.12% compounded quarterly, answer the following:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A manufacturing firm purchased a heavy duty drilling machine. They were given two
payment options:
Option 1: Make a payment of $34,000 immediately to settle the invoice for the
machine.
Option 2: Make a payment of $22,000 immediately and the balance of $23,550 in 3
months to settle the invoice.
If money is worth 4.12% compounded quarterly, answer the following:
a. What is the total present value of Option 2?
Round to the nearest cent
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