Make four annual payments of the beginning Dec 31, 2014
Comparison of Alternatives
On January 1, 2014, Chen Yu's Office Supply Store plans to remodel the store and install new display cases. Chen has the following options of payment. Chen's interest rate is 8%.
a. Pay $180,000 on January 1, 2014.
b. Pay $196,200 on January 1, 2015.
c. Pay $220,500 on January 1, 2016.
d. Make four annual payments of $55,000 beginning on December 31, 2014.
Required
Which option should he choose?