Question
The HRI company is considering selling its School of Business to Yale. The proposed deal would require Yale to pay HRI $30,000 and $25,000 at
The HRI company is considering selling its School of Business to Yale. The proposed deal would require Yale to pay HRI $30,000 and $25,000 at the end of years 1 and 2, and to also make yearly payments (at the end of the year) of $15,000 in years 3 through 9. Yale would make a final payment to HRI for $10,000 at the end of year 10. If the discount rate is 12% what is the present value of the series of payments?
A. $54,585
B. $105,250
C. $109,160
D. $104,520
E. $54,735
F. None of the above
Cornell has also offered to acquire HRI with a one time payment of $100,000. Which offer should HRI take and why?
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