FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Nancy Houser has a $1,500 overdue debt for medical books and supplies at Ken's Bookstore. She has only $500 in her checking account and doesn't want her parents to know about this debt. Ken's tells her that she may settle the account in one of two ways since she can't pay it all now: 1. Pay $500 now and $1,200 when she completes her residency, two years from today. 2. Pay $2,000 one year after completion of residency, three years from today. Assuming that the cost of money is the only factor in Nancy's decision and that the cost of money to her is 8%, which alternative should she choose?
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