Essay
An obligation can be settled by making a payment of $12 000 now and a final payment of $32 000 in 4 years. Alternatively, the obligation can be settled by payments of $2700 at the end of every three months for five years. Interest is 10% compounded quarterly.
Compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow criterion.
Correct Answer:
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ALT. 1 = 12000.00 + 32000.00(1.025)-16
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Correct Answer:
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AL...View Answer
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