The buyer of a certain machine may pay either 200,000 cash down payment and 200,000 annually for the next 6 years, or pay 350, 000 cash and 200, 000 annually for the next five years. If the money is worth 12% compounded annually, which method of payment is better for the buyer and by how much?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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The buyer of a certain machine may pay either 200,000 cash down payment and 200,000 annually for the next 6 years, or pay 350, 000 cash and 200, 000 annually for the next five years. If the money is worth 12% compounded annually, which method of payment is better for the buyer and by how much?  

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