An Obligation Can Be Settled by Making a Payment of $12

question 16

Essay

An obligation can be settled by making a payment of $12 000 now and a final payment of $32 000 in 4 years. Alternatively, the obligation can be settled by payments of $2700 at the end of every three months for five years. Interest is 10% compounded quarterly.
Compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow criterion.

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Definitions:

Justification/Recommendation Report

A document that provides reasons for a decision or course of action and suggests specific actions to be taken.

All-In-One Machine

A device that combines several functionalities, such as printing, scanning, copying, and sometimes faxing, into a single unit.

Memo

A written message, typically within an organization, conveying information or instructions in a formal manner.

Informal Reports

Casual or less structured reports typically used for internal communication in an organization.