Delivery of solar powered military troop transport vehicle

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Reference no: EM131222037

Your company has been offered a contract for the development of and delivery of a solar powered military troop transport vehicle. The request for proposal provides all the necessary technical specifications and it also stipulates that two working, economically feasible prototypes must be delivered in four years, at which time you will receive your only customer payment—a single final payment of $50 million. Assume a reinvestment interest rate of 18% for all the monies received over the next four years. (You may ignore income taxes). (a) What lump-sum dollar amount would you be willing to accept today instead of the $50 million in four years? (b) Alternatively, what four-yearly receipts, starting a year from now, might you be willing to accept?

Reference no: EM131222037

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