Question
A shop is interested to get into the drone delivery business. The shop receives to investment options. The first option is an outlay of a
A shop is interested to get into the drone delivery business. The shop receives to investment options. The first option is an outlay of a $3 million dollar payment now. They expect to receive $3500 a month for 10 years at 5% compounded quarterly. The second option is to pay five annual payments of $200.500 over the next five years. In return the company will receive a one time payment of 14, 000 in 5 years. Interest for this option is 5% compounded annually. Use the net present value method to determine which is the better option for the company. What is your advice to the company?
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