Gary found two feasible options for an apartment to rent for the next 2 years....
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Gary found two feasible options for an apartment to rent for the next 2 years. Option A requires monthly rent of $600 to be paid at the beginning of each month. Option B allows for end-of-month rent payments of $600 (same amenities as in option A). Gary uses a fairly high annual discount rate of 24% (sadly, he is also a high credit risk). Find the PV of the future rent payments for both options over the 2 -year time period and explain which one Gary will prefer, if he bases his decision strictly on cash flow. (Round present value foctor calculations to 5 decimal places, eg. 1.25124 and final answers to 2 decimal places eg. 5,125.36 ) Click here to view the factor table Gary would choose , because he would effectively be paying in rent over this two-year period
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