Denzel needs a new car. At the dealership, he finds the car that he likes. The dealership gives him two payment options: 1. Pay $35,000 for the car today. 2. Pay $4,000 at the end of each quarter for three years. Required: 1-a. Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to 2 decimal places.) Present Value Option 1 Option 2 1-b. Which option gives him the lower cost? Option 1 Option 2
Denzel needs a new car. At the dealership, he finds the car that he likes. The dealership gives him two payment options: 1. Pay $35,000 for the car today. 2. Pay $4,000 at the end of each quarter for three years. Required: 1-a. Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to 2 decimal places.) Present Value Option 1 Option 2 1-b. Which option gives him the lower cost? Option 1 Option 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Denzel needs a new car. At the dealership, he finds the car that he likes. The dealership gives him two payment options:
1. Pay $35,000 for the car today.
2. Pay $4,000 at the end of each quarter for three years.
Required:
1-a. Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value. (FV of $1, PV of $1, FVA of $1, and PVA
of $1) (Use appropriate factor(s) from the tables provided. Round your answers to 2 decimal places.)
Present Value
Option 1
Option 2
1-b. Which option gives him the lower cost?
Option 1
Option 2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fffc9e855-9ec7-4b7a-bc35-3c60fdd15b39%2F9a9052b9-0618-4fac-94b1-a0711b6ce25d%2F0d8pie4.png&w=3840&q=75)
Transcribed Image Text:Denzel needs a new car. At the dealership, he finds the car that he likes. The dealership gives him two payment options:
1. Pay $35,000 for the car today.
2. Pay $4,000 at the end of each quarter for three years.
Required:
1-a. Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value. (FV of $1, PV of $1, FVA of $1, and PVA
of $1) (Use appropriate factor(s) from the tables provided. Round your answers to 2 decimal places.)
Present Value
Option 1
Option 2
1-b. Which option gives him the lower cost?
Option 1
Option 2
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