Afterthought Construction Co

question 20

Multiple Choice

Afterthought Construction Co. is about to sell some used equipment to ABC Leasing. ABC has offered the following two payment schemes: a) $50,000 now and $200,000 at the end of seven years or b) $50,000 now, $50,000 at the end of two years, $50,000 at the end of five years, and $150,000 at the end of ten years. If the applicable discount rate for either transaction is 8%, what are the net present values for both payment schemes?

• A) a) = 162,000 b) = 196,378
• B) a) = 162,000 b) = 198,000
• C) a) = 166,700 b) = 196,378
• D) a) = 166,700 b) = 208,738
• E) a) = 183,500 b) = 210,00

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