General Motors advertised three alternatives for a 25-month lease on a new Blazer: (1) zero dollars down and a lease payment of $1,750 per month for 25 months, (2) $5,000 down and $1,500 per month for 25 months, or (3) $38,500 down and no payments for 25

The best alternative is option 2: $5,000 down and $1,500 per month for 25 months. To determine the present value of each option, we need to find the present value of the monthly payments and the down payment. For option 1, the present value of the monthly payments is: PV = PMT x (1 - (1 + r/n)^-nt) / (r/n) PV = $1,750 x (1 - (1 + 0.12/12)^-25) / (0.12/12) PV = $37,415.11 The present value of the down payment is $0, since there is no down payment. Therefore, the total present value for option 1 is $37,415.11. For option 2, the present value of the monthly payments is: PV = $1,500 x (1 - (1 + 0.12/12)^-25) / (0.12/12) PV = $31,525.20 The present value of the down payment is $5,000. Therefore, the total present value for option 2 is $36,525.20. For option 3, the present value of the monthly payments is $0, since there are no monthly payments. The present value of the down payment is $38,500. Therefore, the total present value for option 3 is $38,500. Based on the present value calculations, option 2 has the lowest present value, making it the best alternative. Option 1 has a higher present value due to the higher monthly payments, and option 3 has the highest present value due to the large down payment.