New Techno Corporation is a rapidly growing biotech company that has a required rate of return of 12?%. It plans to build a new facility in Santa Clara County. The building will take 2 years to complete. The building contractor offered New Techno a choice of three payment? plans, as? follows

Plan? I: Payment of $250,000 at the time of signing the contract and $4,575,000 upon completion of the building. The end of the second year is the completion date.

times

Plan? II: Payment of $1,575,000 at the time of signing the contract and $1,575,000 at the end of each of the 2 succeeding years.

times

requirement

Using the net present value method, calculate the comparative cost of each of the three payment plans being considered by

New TechnoNew Techno.

2.

Which payment plan should

New TechnoNew Techno

?choose? Explain.

3.

Requirement 1. Using the net present value? method, calculate the comparative cost of each of the three payment plans being considered by

New TechnoNew Techno.

?(Round your final answers to the nearest whole? dollar.)

The net present value cost of Plan I is $

.

The net present value cost of Plan II is $

.

The net present value cost of Plan III is $

.

Requirement 2. Which payment plan should

New TechnoNew Techno

?choose? Explain.Based on the financial? criteria,

New TechnoNew Techno

should choose PLAN 1,2,3,

?

Plan I

Plan II

Plan III

since it has the Lowest/highest

?

highest

lowest

net present value cost.

Requirement 3. Discuss the financial? factors, other than the cost of the?plan, and the nonfinancial factors that should be considered in selecting an appropriate payment plan.

Begin by selecting two financial factors that should be considered in selecting an appropriate payment plan.

Now select two nonfinancial factors that should be considered in selecting an appropriate payment plan.

Discuss the financial? factors, other than the cost of the?plan, and the nonfinancial factors that should be considered in selecting an appropriate payment plan.

Plan? III: Payment of $325,000at the time of signing the contract and $1,475,000

at the end of each of the 3 succeeding years.