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Which method of payment do recommend

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Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,600,000, or it can make annual payments of $300,000 for 15 years, each payment due on the last day of the year.

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Problem 1: Which method of payment do you recommend, assuming an expected effective interest rate of 8% during the future period?

Reference no: EM132727278

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