A programmer is selling the rights of a newvideo game he has developed. Three companies have offered himcontracts.1. The first contract offers payments of $60,000 at the end of eachyear for the next 15 years.2. The second contract offers $50,000 at the end of each year for10 years, and then $90,000 per year for the following 5 years.3. The third contract offers 15 payments, starting with $35,000 atthe end of the first year, $40,000 atthe end of the second, and so forth, increasing by $5,000 eachyear, i.e., the last payment (at theend of year 15) will be $35,000 + (14x$5,000)).Assume the genius uses a MARR of 10%. Based on the PresentWorth, which offer should be selected?

3. Third Contract The third contract offers payments starting at $35,000, increasing by $5,000 each…

Answered: A programmer is selling the rights of a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

See similar textbooks

Similar questions

A company buys a machine for $18,000, which it agrees to pay for in five equal annual payments, beginning one year after the date of purchase, at an annual interest rate of 7%. Immediately after the second payment, the terms of the agreement are changed to allow the balance due to be paid off in a single payment the next year. What is the final single payment? Solution: 1. Draw the CFD by yourself; 2. First, calculate annual payment amount for the first 2 years: O A= + 7%, • )=18000x =$ o The final payment is the • worth of the : unpaid payments. 3. Second, Calculate the single payment amount due at the end of the 3rd year: F=S
AD Construction, a property developer, is building a property complex consisting of 50 apartments. Apartments are similar in size and proportion - however, can be adapted to suit client needs. AD Construction enters into a contract with customer A. The client wants to buy an apartment and agrees to a total price of CU100,000 per apartment. The payment schedule is as follows:- After signing the contract, clients pay a deposit of CU 10,000 each.- Milestone: 1 year before the planned completion, AD Construction will send a progress report to the client and the client will have to pay CU 50,000 each.- Completion: After construction is completed, the legal ownership of the apartment is transferred to the client and they pay the remaining amount of CU40,000 each. The assumed construction period is 2 years from the contract date. AD Construction has the right to withhold payment from any client in the event that that client fails to pay for the contract prior to its completion. There is no…
AD Construction, a property developer, is building a property complex consisting of 50 apartments. Apartments are similar in size and proportion - however, can be adapted to suit client needs. AD Construction enters into a contract with customer B. The client wants to buy an apartment and agrees to a total price of CU100,000 per apartment. The payment schedule is as follows: After signing the contract, clients pay a deposit of CU 10,000 each. Milestone: 1 year before the planned completion, AD Construction will send a progress report to the client and the client will have to pay CU 50,000 each. Completion: After construction is completed, the legal ownership of the apartment is transferred to the client and they pay the remaining amount of CU40,000 each. The assumed construction period is 2 years from the contract date. AD Construction has the right to withhold payment from any client in the event that that client fails to pay for the contract prior to its completion. The contract…
Lola's Furniture is offering a "houseful of furniture" for $9,999. Furthermore, if you make a down payment of $999 you can wait for 1½ years to pay the $9,000 balance. If Lola's Furniture immediately sells the $9,000 receivable contract to the Barzini Finance Group at a discount rate of 18% compounded quarterly, how much money will Lola's actually receive for the "houseful of furniture"?
Blackstone Company purchased a new software system costing $35,000. To finance the purchase, Blackstone signed a contract agreeing to pay the cost over the next 8 years, with a payment due every six months; the first payment will be made six months from the date of purchase. Blackstone's usual interest rate is 10%. What is the amount of the payment required (rounded to the nearest dollar)? 's usual 096, What is the amount of the Select one: O a. 16,030 O b. 6,560 O c. 3,229 d. 2,575 e. None of the above
A buyer is considering purchasing a 10-acre parcel in Peoria, Arizona for economic development. The parcel has a sales price of $720,000. The buyer agrees with the seller for purchasing the property with 15% down up front and paying off the balance in 12-months. If a bank is willing to provide 3% annual interest, compounded monthly, how much should the monthly deposit be into that account to pay off the desired balance to the seller?
A company buys a machine for $17,000, which it agrees to pay for in six equal annual payments, beginning one year after the date of purchase, at an annual interest rate of 5%. Immediately after the second payment, the terms of the agreement are changed to allow the balance due to be paid off in a single payment the next year. What is the final single payment?
onca Co. is looking for financing to expand its laboratory and buys a patent for a new technology which it's going to use for the next 10 years. Ronca Co. agrees to pay $70,000 for the patent. Instead of paying cash for the patent, Ronca Co. issues a note for $100,000, which is payable in five annual installments of $20,000 each. Ronca Co. pays the seller $20,000 on the day of the contract signing. Which of the following is the amount of debt Ronca Co. is going to record in its accounting? A $20,000 B $80,000 C $100,000 D $70,000
Pearl Excavating Inc. is purchasing a bulldozer. The equipment has a price of $92,800. The manufacturer has offered a payment plan that would allow Pearl to make 10 equal annual payments of $16,424.13, with the first payment due one year after the purchase. Pearl could borrow $92,800 from its bank to finance the purchase at an annual rate of 9%. Should Pearl borrow from the bank or use the manufacturer’s payment plan to pay for the equipment? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 7%.) Manufacturer's rate %
An aerospace engineer is signing up a consulting agreement with the Balalae Airport in Solomon Islands. The length of the contract is 7 years and consulting fees are $200,000 at the end of Year 1 increasing by $25,000 per year starting at the end of Year 2 through the end of the contract. Assuming the engineer earns 8% return on his investment, what is the average consulting fee over 7-year contract?
Meg O’Byte wants to buy a new computer for her business for Internetaccess on a cable modem. The computer system cost is $5,100. The cablecompany charges $200 (including the cable modem) for installation and hasa $50 a month usage fee for businesses, paid at the end of the month. Megexpects to buy the system with a $100 down payment, financing the balanceat 8 percent over the next 4 years. She will sell the computer for $1,000when she upgrades. She expects a $500 a month increase in cash flow and isin the 25 percent tax bracket.a. The start-up costs are __________________.b. The PVC is __________________.c. The PVB is __________________.d. The monthly payment for the computer is __________________.
A contractor’s price for a new building was $96,000. You decide to buy the building, making a payment of $12,000 down and financing the balance by making equal payments at the end of every 6 months for 12 years. Interest is 7.3% compounded semi-annually. B) For the first payment period, how much interest is paid, how much of the principal is repaid, and what is the loan balance at the end of first installment? how much interest is paid how much of the principal is repaid what is the loan balance? C) For the fifteen payment period, how much interest is paid, how much of the principal is repaid, and what is the loan balance at the end of first installment? how much interest is paid how much of the principal is repaid what is the loan balance?

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS