Homework Answers
Present value of payments is as follows:
Option A = 15990/(1.1418) = $14004.20
Option B = 27006/(1.1418)^5 = $13915.86
Option C = 45852/(1.1418)^9 = $13901.06
Indigo River Technology would like to pay with the lowest present value and Red Royal Banking would want to receive highest present value
Hence, the answer is
Indigo River Tech. should prefer Option B more than Option A and Option C more than Option A
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