Question

The city museum will have a Picasso exhibit on loan for three years. As part of the conditions of the loan, a specialized alarm and security system must be installed. High Security Company will install a suitable system for a $ 50,000 initial payment and $ 2,500 per month in monitoring fees. Tight Security Company will install a suitable system for an $ 75,000 initial payment and $ 1,675 per month in monitoring fees. Both security systems would be used for three years. Assuming an annual discount rate of 9 percent with monthly compounding, which contract has the lowest net present cost?
A. Solve using a spreadsheet program such as Excel.
B. Solve using a financial calculator (optional).



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  • CreatedDecember 19, 2014
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