Reference no: EM133033909

Question - Suppose that you can subscribe to a magazine using either a one-year rate of $15, a two-year rate of $28, a three-year rate of $42, or a four-year rate of $54. If want to receive this magazine for four years and if your opportunity cost of funds is 10.25%, which rate offers the lowest cost?

 a. A four-year subscription costing $54 and paid immediately.

b. Four one-year subscriptions, of $15 each, paid at the beginning of each year.

c. A two-year subscription paid immediately, costing $28, followed by another two-year subscription costing $28 and paid at the beginning of the third year.

d. A one-year subscription paid immediately, costing $15, followed by a three-year subscription costing $42 and paid at the beginning of the second year.

e. There is not enough information provided to answer this question.