Harte Systems, Inc., a maker of electronic survillance equipment, is considering selling to a well-known hardware chain the rights to market its home security system. The proposed deal calls for the hardware chain to pay Harte $32,000 and $23,000 at the end of years 1 and 2 and to make annual year-end payments of $10,000 in years 3 through 9. A final payment to Harte of $20,000 would be due at the end of year 10.

a.If Harte applies a required rate of return of 88% to them, what is the present value of this series of payments?

b.A second company has offered Harte an immediate one-time payment of $100,000 for the rights to market the home security system. Which offer should Harte accept?