Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement.
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Question:
Assume thatSonic Foundry Corporationhas a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,512,000, or it can make annual payments of $289,600for 15 years.
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Payments must begin now and be made on the first day of each of the 15 years, what payment method would you recommend assuming an expected effective-interest rate of8% 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.)
1) Present value of annual payment? $
2) Recommended payment method:
Annual Payments? or Immediate Payment?
Posted Date: