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Which payment plan is more attractive

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Problem - Your firm is considering the purchase of a new office phone system. You can either pay $32,500 now, or $1,050 per month for 40 months.

a. Suppose your firm currently borrows at a rate of 6% per year (APR with monthly compounding). Which payment plan is more attractive?

b. Suppose your firm currently borrows at a rate of 19% per year (APR with monthly compounding). Which payment plan would be more attractive in this case?

a. Suppose your firm currently borrows at a rate of 6% per year (APR with monthly compounding). Which payment plan is more attractive?

Reference no: EM132964992

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