Company XYZ has hired you as a consultant. It has suggested two options to pay for your services: Option A: An initial payment of 100,000AED on signing the contract, 200,000AED end of the second year and 100,000 at end of the third year. Option B: An initial payment of 100,000AED on signing the contract, 150,000AED end of the first year, and 140, 000AED end of the second year. Which payment plan should you accept if the market interest rate is 10%? Briefly explain your choice.
Company XYZ has hired you as a consultant. It has suggested two options to pay for your services: Option A: An initial payment of 100,000AED on signing the contract, 200,000AED end of the second year and 100,000 at end of the third year. Option B: An initial payment of 100,000AED on signing the contract, 150,000AED end of the first year, and 140, 000AED end of the second year. Which payment plan should you accept if the market interest rate is 10%? Briefly explain your choice.
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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Company XYZ has hired you as a consultant. It has suggested two options to pay for your services:
Option A: An initial payment of 100,000AED on signing the contract, 200,000AED end of the second year and 100,000 at end of the third year.
Option B: An initial payment of 100,000AED on signing the contract, 150,000AED end of the first year, and 140, 000AED end of the second year.
Which payment plan should you accept if the market interest rate is 10%? Briefly explain your choice.
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