Jenkins Security Has Learned That a Rival Has Offered to Supply

question 62

Multiple Choice

Jenkins Security has learned that a rival has offered to supply a parking garage with security for ten years for $45,000 up front and a further $15,000 per year. If Jenkins Security offers to provide security for eight years for an upfront cost of $60,000 and a separate yearly payment, by what maximum amount can this yearly payment be over $20,000, so that Jenkins' offer matches the equivalent annual annuity of their rival's offer? (Assume a cost of capital of 5%.)

• A) -$89
• B) -$94
• C) -$100
• D) -$111

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Definitions:

Daily Average

The daily average refers to the average quantity or value of something measured over a single day.