New Techno Corporation is a rapidly growing biotech company that has a required rate of return of

6%. 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 $ 175,000at the time of signing the contract and $4,700,000 upon completion of the building. The end of the second year is the completion date.

Plan II: Payment of $1,725,000 at the time of signing the contract and $1,725,000 at the end of each of the 2 succeeding years.

Plan III: Payment of $200,000 at the time of signing the contract and $1,700,000 at the end of each of the 3 succeeding years.

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

Requirement 2. Which payment plan should New Techno choose? Explain.