A certain manufacturing plant is being sold and was submitted for bidding. Two bids were submitted by interested buyers. The first bid offered to pay P200,00 each year for 5 years, each payment being made at the beginning of each year. The second bidder offered to pay P120,000 the first year,P180,000 the second year and P270,000 each year for the next 3 years, all payments being made at the beginning of each year. If money is worth 12% compounded annually, which bid should owner of the plant accept?
A certain manufacturing plant is being sold and was submitted for bidding. Two bids were submitted by interested buyers. The first bid offered to pay P200,00 each year for 5 years, each payment being made at the beginning of each year. The second bidder offered to pay P120,000 the first year,P180,000 the second year and P270,000 each year for the next 3 years, all payments being made at the beginning of each year. If money is worth 12% compounded annually, which bid should owner of the plant accept?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A certain manufacturing plant is being sold and was submitted for bidding. Two bids were
submitted by interested buyers. The first bid offered to pay P200,00 each year for 5 years,
each payment being made at the beginning of each year. The second bidder offered to pay
P120,000 the first year,P180,000 the second year and P270,000 each year for the next 3
years, all payments being made at the beginning of each year. If money is worth 12%
compounded annually, which bid should owner of the plant accept?
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