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Compute the present value of annual payment

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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 $2,009,000, or it can make annual payments of $259,600for 15 years.

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 10% during the future period?(Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Required -

1) Compute the Present value of annual payment?

2) Recommended payment method? Annual or Immediate?

Reference no: EM132565631

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