Question
Silly Cat Training (SCT), a cat training school, is being sued by the parents of a child who was bitten by a cat in the
Silly Cat Training (SCT), a cat training school, is being sued by the parents of a child who was bitten by a cat in the custody of SCT. Two out-of-court settlements are under consideration. Under the first, SCT would pay the injured party $100,000 per year for 10 years, with the first payment one year from today. Under the second alternative, SCT would pay the injured party $100,000 today and $1,000,000 ten years from today. In your report, describe which of these offers is best from SCTs perspective, assuming a 2.5 percent interest rate? PLEASE SHOW WORK IN EXCEL
- Present value of 1st settlement: $100,000 per year for ten years
- Present value of 2nd settlement: $100,000 today and $1,000,000 ten years from today
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started