Exercise 5-9 (Algo) Noninterest-bearing note; single payment (LO 5-5)Lights, Camera, and More sells filmmaking equipment. The company offers three purchase options: (1) pay full cash today, (2) pay one-half down and the remaining one-half plus 10% in one year, or (3) pay nothing down and the full amount plus 15% in one year. George isconsidering buying equipment from Lights, Camera, and More for $75,000 and therefore has the following payment options:Option 1Option 2Option 3PaymentToday$ 75,00037,5000Required:1-a. Assuming an annual discount rate of 11%, calculate the present value and the total cost.1-b. Which option's cost has the lowest present value?Option 1Option 2Option 3Payment inOne Year$041,25086,250Complete this question by entering your answers in the tabs below.Req 18Req 1AAssuming an annual discount rate of 11%, calculate the present value and the total cost.Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1,and PVA of $1)TotalPayment$ 75,00078,75086,250PaymentTodayPresent Value ofPayment in One YearTotal Present Value(or Total Cost)< Req 1AReq 1B >

Present Value means the present worth of money which we are going to pay/receive in the future…

Answered: Lights, Camera, and More sells…

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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6. Homes-R-Us is offering free credit on a new $200,000 home. You pay $40,000 down and then $16,000 a year for the next 10 years. We-Build'em-Better does not offer free credit but will give you $40,000 off the list price. a. If the discount rate is 5% per year, which company is offering the better deal? b. If the discount rate is 8% per year, which company is offering the better deal? Compare your answers to (a) and (b). Why do you think you are getting those results? c.
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d You have decided to buy a car that costs $31,000. Since you do not have a big down payment, the lender offers you a loan with an APR of 6.27 percent compounded monthly for 7 years with the first monthly payment due today. What is the amount of your loan payment? Multiple Choice $294.91 $454.51 $456.89 $374.71 $293.38
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You are purchasing a new car for $27,600. The dealership offers you three options: 0% financing: 0 down and 0% financing for 48 months. Rebate: 0 down. If you choose the rebate, you will need to secure a loan for the balance at your local bank. Down payment: Make a down payment of 5% or more and get financing at 1.5% compounded monthly for 48 months: Suppose you make a down payment of 10% of $27,600 and finance the rest at 1.5% compounded monthly for 48 months. How much interest do you pay over the life of the loan? $ ________ . Round to the nearest dollar. You want to make monthly payments of $431, but you don't want a car loan over your head for more than 48 months, so you decide to go with the down payment option. How much of a down payment do you need to make? $ ________. Round to the nearest dollar.

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