Your firm is considering the purchase of a new office phone system. You can either pay $32,500

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Your firm is considering the purchase of a new office phone system. You can either pay $32,500 now, or $1100 per month for 34 months.

a. Suppose your firm currently borrows at a rate of 5% per year (APR with monthly compounding). Which payment plan is more attractive?

b. Suppose your firm currently borrows at a rate of 17% per year (APR with monthly compounding). Which payment plan would be more attractive in this case?

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Corporate Finance The Core

ISBN: 9781292158334

4th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Feb 24, 2024 11:01 PM

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Your firm is considering the purchase of a new office phone system. You can either pay $32,500

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Corporate Finance The Core

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