Determine the present value for each option assuming that

Reference no: EM13586130

Star Studios is looking to purchase a new building for its upcoming film productions. The company finds a suitable location that has a list price of $1,600,000. The seller gives Star Studios the following purchase options: (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.)

1. Pay $1,600,000 immediately.

2. Pay $600,000 immediately and then pay $150,000 each year over the next 10 years, with the first payment due in one year.

3. Make 10 annual installments of $250,000, with the first payment due in one year.

4. Make a single payment of $2,300,000 at the end of five years.

Required: 1-a. Determine the present value for each option assuming that the company can borrow funds to finance the purchase at 8%.

Reference no: EM13586130

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