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A local company in the Northern Cyprus has made an agreement with Fenerium (Istanbul) to purchase $500,000 worth of various official licenced products of
A local company in the Northern Cyprus has made an agreement with Fenerium (Istanbul) to purchase $500,000 worth of various official licenced products of Fenerbahe Sport Club. The local company has offered Fenerium (Istanbul) to pay in one of three ways: (1) pay $500,000 now, (2) pay $1.1 million 5 years from now, or (3) pay an amount of money 5 years from now that has the same purchasing power as $750,000 now. If Fenerium (Istanbul) wants to earn a real interest rate of 10% per year from this sale, and the inflation rate is 6% per year, which offer is economically best for Fenerium?
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