Question
As an innovative way to pay for various software packages, a new high-tech service company has offered to pay your company, Custom Computer Services (CCS),
As an innovative way to pay for various software packages, a new high-tech service company has offered to pay your company, Custom Computer Services (CCS), in one of two ways: (1) pay $500,000 now, (2) pay $1.4 million 5 years from now. a) If the real interest rate is 14% per year and the inflation rate is 10% per year, which offer should you accept? (15 points) b) If your company was offered to be paid an amount of money 5 years from now that will have the same purchasing power as $850,000 now, would this change your decision resulted in part (a) of the question. (consider the same interest and inflation rates given in part a). (10 points)
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