Problem: Present Value of an Annuity at Wellington Wellington Inc., a technology company, is considering selling the rights to one of its products. The company has received the following two bids:

Bid 1 Payment of CAD 20,000 at the end of Year 1, CAD 15,000 at the end of Year 2, and CAD 10,000 at the end of each of Years 3 through 10

Bid 2 Payment of CAD 12,000 at the beginning of each of the next 8 years.

The interest rate is 5.0%, compounded annually.

REQUIRED:

1. Which bid should Wellington select?