Schweser TVM Problem currently, beginning, offering, payments, question

towardsutopia21

Below is a question, that I had some trouble with last night. Let me know what you get for this question.
Williams Warehousing currently has a warehouse lease that calls for five annual payments of $120,000. The warehouse owner, who needs cash, is offering Williams a deal wherein Williams will pay $200,000 this year and then pay only $80,000 each of the remaining 4 years. (Assume that all lease payments are made at the beginning of the year.) Should Williams Warehousing accept the offer if its required rate of return is 9%, and why?
A)
Yes, there is a savings of $49,589 in present value terms.
B)
Yes, there is a savings of $45,494 in present value terms.
C)
Yes, there is a savings of $80,000 over the five years.
D)
No, there is an additional $80,000 payment in this year.
Something doesnt seem right here. I did all the steps the solution asked.
Yes I used BGN. I got 129986 for first 200k.
But the 80,000PMTs just cannot add up to ~459 including the 129986.
Thx.

pogo

Nevermind I was doing this backwards.
GOT IT!

Wasteoftime

Is A the answer ?
I did it in excel :
=120000+NPV(0.09,120000,120000,120000,120000) –$508,766.39
=200000+NPV(0.09,80000,80000,80000,80000) –$459,177.59
Savings = $508,766.39  $459,177.59
=$49,588.80

thisisbrianly

Yep….getting same answers as charu_mulye
answer is A

Bluetick1010

A it is. I did it backwards.