In July 2021, New York State Reached a $86 million settlement with utility companies for failures during natural emergencies and inadequate emergency response plans Assuming that Con Edison was required to pay a total $80.0 million for Isais response failures and steam outages of 2018 and Central Hudson would pay $2 million, and Frontier Inc would pay $4 million in the settlement. They were offered two choices (a) immediate payment of 90 percent of the total liability or (b) immediate payment of 40 percent of the liability in October 2021, and 20 percent paid during the last quarter of the next three years (October 2022, October 2023, and October 2024). Assuming a discount rate of 12 percent, which alternative should EACH of these companies choose, and why show your steps?
In July 2021, New York State Reached a $86 million settlement with utility companies for failures during natural emergencies and inadequate emergency response plans Assuming that Con Edison was required to pay a total $80.0 million for Isais response failures and steam outages of 2018 and Central Hudson would pay $2 million, and Frontier Inc would pay
$4 million in the settlement. They were offered two choices (a) immediate payment of 90 percent of the total liability or (b) immediate payment of 40 percent of the liability in October 2021, and 20 percent paid during the last quarter of the next three years (October 2022, October 2023, and October 2024).
Assuming a discount rate of 12 percent, which alternative should EACH of these companies choose, and why show your steps?
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