Calculate present value of each contract at effective rate

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Reference no: EM13868521

They present you with three contracts, giving you a choice of the three:

(a) 6,400,000 per year for the next 5 years, payable at the end of each year.

(b) 6,000,000 per year for the next 5 years, payable at the beginning of each year.

(c) 3,600,000 per year for the next 10 years, payable at the end of each year.

You decide to calculate the present value of each contract at effective rates 4%, 5% and 6%, and to then decide. Make those calculations. What do you conclude?

Reference no: EM13868521

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