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Category > Accounting Posted 25 Aug 2017 My Price 4.00

Chen Yu’s Office Supply Store

Problem 9-8  Comparison of Alternatives

On January 1, 2014, Chen Yu’s Office Supply Store plans to remodel the store and install new display cases. Chen has the following options of payment. Chen’s interest rate is 8%.

a. Pay $180,000 on January 1, 2014. b. Pay $196,200 on January 1, 2015. c. Pay $220,500 on January 1, 2016.

d. Make four annual payments of $55,000 beginning on December 31, 2014.

Required

Which option should he choose? (Hint: Calculate the present value of each option as of January 1, 2014.)

Answers

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Status NEW Posted 25 Aug 2017 12:08 AM My Price 4.00

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