Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,775,000, or it can make annual payments of $340,000 for 15 years. Click here to view factor tables. Payments must begin now and be made on the first day of each of the 15 years. What payment method would you recommend assuming an expected effective-interest rate of 9% during the future period? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Present value of annual payment Recommended payment method SUPPORT

Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,775,000, or it can make annual payments of $340,000 for 15 years. Click here to view factor tables. Payments must begin now and be made on the first day of each of the 15 years. What payment method would you recommend assuming an expected effective-interest rate of 9% during the future period? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Present value of annual payment Recommended payment method SUPPORT

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

Assume that Sonic Foundry Corporation has a contractual debt
outstanding. Sonic has available two means of settlement. It can either
make immediate payment of $2,775,000, or it can make annual payments
of $340,000 for 15 years.
Click here to view factor tables.
Payments must begin now and be made on the first day of each of the 15
years. What payment method would you recommend assuming an
expected effective-interest rate of 9% during the future period? (Round
factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal
places, e.g. 458,581.)
Present value of annual payment $
Recommended payment method
SUPPORT

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