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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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 is considering buying equipment from Lights, Camera, and More for $130,000 and therefore has the following payment options: Payment Payment in One Option 1 Option 2 Option 3 Required: Today $130,000 Year $ 0 Total Payment $130,000 65,000 0 71,500 149,500 136,500 149,500 1-a. Assuming an annual discount rate of 12%, calculate the present value and the total cost. 1-b. Which option's cost has the lowest present value? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Assuming an annual discount rate of 12%, calculate the present value and the total cost. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) Payment…
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