Determine which schedule is least expensive

Reference no: EM132718983

Question - A construction firm wants to buy a building site and has the choice between three different payment schedules:

a) Pay $67,000 in cash.

b) Pay $12,000 per year for 8 years, where the first installment is to be paid at once.

c) Pay $22,000 in cash and thereafter $7000 per year for 12 years, where the first installment is to be paid after 1 year.

Required - Determine which schedule is least expensive if the interest rate is 11.5% and the firm has at least $67,000 available to spend in cash. What happens if the firm can only afford $22,000 as an immediate payment?

Reference no: EM132718983

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