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Problem:

The local fitness store allows customers to choose their payment plan when they purchase exercise equipment. For the treadmill you purchase, you have the option to pay $1,200 today or pay $500 today along with $400 at the end of each of the next two years. The current interest rate on your money market at the bank is 8%.

Required:

Question: Which is the best payment option?

Note: Show all workings.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91173737

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