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Which alternative should she choose

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Question - Judy Thomas has a $1,800 overdue debt for medical books and supplies at Joe's Bookstore. She has only $600 in her checking account and doesn't want her parents to know about this debt.

Joe's tells her that she may settle the account in one of two ways since she can't pay it all now:

1. Pay $600 now and $1,500 when she completes her residency, two years from today.

2. Pay $2,400 one year after completion of residency, three years from today.

Assuming that the cost of money is the only factor in Judy's decision and that the cost of money to her is 8%, which alternative should she choose?

Reference no: EM132579374

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