Different terms of purchase

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When shopping for the latest LCD TV you have been offered the same TV with two different terms of purchase. 

Option 1: Pay $1,000 now and 4 annual installments of $2,000 each, with the first payment starting at the end of the 2nd year.

Option 2: Pay $7,000 cash today.

If the stores financing rate is 8% EAR, which option should you choose?

Reference no: EM131895741

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