Ralston Consulting, Inc., has a $35,000 overdue debt with Supplier No. 1. The company is low on cash, with only $9,800 in the checking account and does not want to borrow any more cash. Supplier No. 1 agrees to settle the account in one of two ways: Option 1: Pay $9,800 now and $33,250 when some large projects are finished, two years from today. Option 2: Pay $49,000 three years from today, when even larger projects are finished. Assuming that the only factor in the decision is the cost of money (8%) (Click here to see present value and future value tables) A. Calculate the present value of each option. Round your present value factor to three decimal places and final answer to the nearest dollar. Present value of Option 1 $fill in the blank 1 Present value of Option 2 $fill in the blank 2 B. Which option should Ralston choose? Option 1 or Option 2

Ralston Consulting, Inc., has a $35,000 overdue debt with Supplier No. 1. The company is low on cash, with only $9,800 in the checking account and does not want to borrow any more cash. Supplier No. 1 agrees to settle the account in one of two ways: Option 1: Pay $9,800 now and $33,250 when some large projects are finished, two years from today. Option 2: Pay $49,000 three years from today, when even larger projects are finished. Assuming that the only factor in the decision is the cost of money (8%) (Click here to see present value and future value tables) A. Calculate the present value of each option. Round your present value factor to three decimal places and final answer to the nearest dollar. Present value of Option 1 $fill in the blank 1 Present value of Option 2 $fill in the blank 2 B. Which option should Ralston choose? Option 1 or Option 2

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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