Mann Johnston
08/28/2023 · Elementary School

A doctor is planning to buy an X-ray machine for his hospital. He has two options. He can either purchase it by making a cash payment of Rs. 5 lakhs or Rs. \( 6,15,000 \) are to be paid in six equal annual instalments. Which option do you suggest to the doctor assuming the rate of return is \( 12 \% \) ?

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The doctor should choose the instalment option of paying Rs. 6,15,000 in six equal annual instalments as it has a lower present value.

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