Denzel needs a new car. At the dealership, he finds the car that he likes. The dealership gives him two payment options 1. Pay $28,000 today for the car. 2. Pay $2,600 at the end of each quarter for three years. Required: 1-a. Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value. 1-b. Which option gives him the lower cost? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value. Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Present Value Option 1 Option 2

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Denzel needs a new car. At the dealership, he finds the car that he likes. The dealership gives him two payment options:
1. Pay $28,000 today for the car.
2. Pay $2,600 at the end of each quarter for three years.
Required:
1-a. Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value.
1-b. Which option gives him the lower cost?
Complete this question by entering your answers in the tabs below.
Req 1A
Req 1B
Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value.
Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1,
and PVA of $1)
Present Value
Option 1
Option 2
Transcribed Image Text:es Denzel needs a new car. At the dealership, he finds the car that he likes. The dealership gives him two payment options: 1. Pay $28,000 today for the car. 2. Pay $2,600 at the end of each quarter for three years. Required: 1-a. Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value. 1-b. Which option gives him the lower cost? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Assuming Denzel uses a discount rate of 12% (or 3% quarterly), calculate the present value. Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Present Value Option 1 Option 2
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