Beatty, inc. acquires 100% of the voting stock of gataux company on january 1, 2017 for $80,000, consisting of $20,000 in cash and 6,000 shares of stock. a contingent payment of $12,000 in cash will be paid on april 1, 2018 if gataux generates cash flows from operations of $26,500 or more in the next year. beatty estimates that there is a 30% probability that gataux will generate at least $26,500 next year, and uses an interest rate of 4% to incorporate the time value of money. the fair value of $12,000 at 4%, using a probability-weighted approach, is $3,461. a contingent payment of $20,000, payable in stock, will be paid to the former owners of gataux on april 1, 2018 if the market value of beatty stock drops below $10 per share. beatty estimates there is a 15% probability that its share price will not exceed that threshold. using the same interest rate and probability-weighted approach, beatty calculates the market value of the stock contingency to be $2,884. what will beatty record as its investment in gataux on january 1, 2017?

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of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.