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Assume that Alan Corporation has a contractual debt outstanding. Alan has available two means of settlement: It can either make immediate payment of $1,535,000, or
Assume that Alan Corporation has a contractual debt outstanding. Alan has available two means of settlement: It can either make immediate payment of $1,535,000, or it can make annual payments of $2000,0000 for 10 years, each payment due on the last day of the year. Which method of payment do you recommend, assuming an expected effective interest rate of 8% during the future period? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458.581.) Present Value of Annual Payments: Recommend payment method: Annual payments or immediate payments
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