Chapter 11, Problem 7MC

Using the information provided, what transaction represents the best application of the present value of an annuity due of $1?

A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year.

B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years.

C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years.

D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.