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Calculate the balance payment offered in option

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Reference no: EM132382586

When Pacific Inc. bid for a project with the government, the company was offered the following two payment options:

  • Option (A): A payment of $552,500 at the end of 4 years, which is the scheduled completion time for the project.
  • Option (B): 215,000 paid upfront at the beginning of the project and the balance payment in 4 years.

If the two payments are finally equivalent, and the interest rate is 4.50% compounded monthly, calculate the balance payment offered in option (B)

Reference no: EM132382586

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