Homework Answers
Minimum lump sum offer is at least the present value of 26 annual payments
Value of offer > or = 20,000,000 + 20,000,000(P/A, 6%, 25)
= 20,000,000 + 20,000,000*12.7834
= $275,668,000
Any lump sum offer greater than $275,668,000 would be readily acceptable.
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