Accounting

George Mackay has identified two buildings that are suitable for his new office. For building A, George will have to pay $245,000 a year for 10 years, while building B will cost $175,000 a year for 15 years. The interest rate on both loans is 9 percent.

A. Which building is less expensive?

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B. Which building is less expensive if building A has payments of $150,000 for 20 years and the interest rate is 9 percent?

Michelle Paul has acquired a new computer system at a price of $240,000 and is considering two financing alternatives. If National Bank makes the loan, Michelle will make monthly payments of $2,545.57 for 10 years to repay the debt. If First State Bank makes the loan, the monthly payments will be $2,925.43 for eight years.

A. What is the interest rate charged by National Bank?

B. What is the interest rate charged by First State Bank?

C. What other factors should Michelle take into consideration when deciding which bank to use?

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