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Equivalent annual annuity of rival offer

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Irksome Power Co. has learned that its rival utility company has offered to supply a business with electricity for ten years for $50,000 up front and a further $20,000 per year. If Irksome Power offers to provide electricity for eight years for an upfront cost of $70,000 and a separate yearly payment, what is the maximum that this yearly payment can be so that Irksome's offer matches the equivalent annual annuity of their rival's offer? Irksome's cost of capital of 6%.

Reference no: EM132828567

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