Simes Innovations, Inc., is negotiating to purchase exclusive rights to manufacture and market a solar-powered toy car. The car's inventor has offered Simes the choice of either a one-time payment of $2,300,000 today or a series of 8 year-end payments of $375,000.

a.If Simes has a cost of capital of 15%, which form of payment should it choose?

b.What yearly payment would make the two offers identical in value at a cost of capital of 15%?

c.What would be your answer to part a of this problem if the yearly payments were made at the beginning of each year?

d.The after-tax cash inflows associated with this purchase are projected to amount to $243,750 per year for 15 years. Will this factor change the firm's decision about how to fund the initital investment?

Question 2, P10-8 (similar to) > Homework: Chapter 10 - Capital Budgeting Techniques (HW) HW Score: 29.49%, 2.36 of 8 points O Points: 0 of 1 Save Part 1 of 6 NPV Simes Innovations, Inc., is negotiating to purchase exclusive rights to manufacture and market a solar-powered toy car. The car's inventor has offered Simes the choice of either a one-time payment of $2,300,000 today or a series of 8 year-end payments of $375,000. a. If Simes has a cost of capital of 15%, which form of payment should it choose? b. What yearly payment would make the two offers identical in value at a cost of capital of 15%? c. What would be your answer to part a of this problem if the yearly payments were made at the beginning of each year? d. The after-tax cash inflows associated with this purchase are projected to amount to $243,750 per year for 15 years. Will this factor change the firm's decision about how to fund the initital investment? a. If Simes has a cost of capital of 15%, the present value of the annuity is $. (Round to the nearest dollar.)