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Value of a mixed stream Harte Systems, Inc., a maker of electronic survillance equipment, is considering selling the rights to market its home security system
Value of a mixed stream Harte Systems, Inc., a maker of electronic survillance equipment, is considering selling the rights to market its home security system to a well-known hardware chain. The proposed deal calls for the hardware chain to pay Harte $26,000 and $21,000 at the end of years 1 and 2 and to make annual year-end payments of $14,000 in years 3 through 9. A final payment to Harte of $25,000 would be due at the end of year 10. a. Select the time line that represents the cash flows involved in the offer. b. If Harte applies a required rate of return of 12% to them, what is the present value of this series of payments? c. A second company has offered Harte an immediate one-time payment of $100,000 for the rights to market the home security system. Which offer should Harte accept? a. Which of the following time lines represents the cash flows involved in the offer? (Select the best answer below.) A. 0 1 2 3 10 $21,000 $26,000 $25,000 $14,000 $21,000 1 2 3 OB. 0 10 $14,000 $25,000 $26,000 $21,000 $14,000 1 2 3 OC. 0 10 + - $26,000-$21,000 - $14,000 - $14,000-$25,000 OD 0 1 2 3 9 10 $26,000 $21,000 - $14,000 - $14,000 $25,000
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