Which rental payment scheme would you choose

Assignment Help Financial Management

Reference no: EM131234050

You can choose between the following rent payments:

(a) A lump sum cash payment of $100,000;

(b) 10 annual payments of $12,000 each, the first occurring immediately;

(c) 120 monthly payments of $1,200 each, the first occurring immediately. (Friendly suggestion: This is a lot easier to calculate on a computer spreadsheet.)

(d) Which rental payment scheme would you choose if the interest rate was an effective 5% per year?

(e) Spreadsheet question: At what interest rate would you be indifferent between the first and the second choice above? (Hint: Graph the NPV of the second project as a function of the interest rate.)

Reference no: EM131234050

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