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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:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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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