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Alternative Comparison-Different Lives Three different plans were presented to the GAO (General Accounting Office) by a high-tech facilities manager for operating a portable cyber-security facility. Plan A: Renewable 1-year contracts with payments of $1 million at the beginning of each year. Plan B: A 2-year contract that requires three payments of $600,000 each, with the first one to be made immediately and the second and third payment made at the beginning of the following two 6-month intervals; no payments required during the second year of the contract. Plan C: A 3-year contract that entails a payment of $1.5 million now and another payment of $0.5 million 2 years from now. Assuming the GAO can renew any of the plans under the same conditions, if it decides to do so, which plan is best on the basis of a present worth analysis at an interest rate of 6% per year, compounded semiannually? Solve using (a) factors and (b) a spreadsheet. (Hint: Construct a cash flow diagram before working this problem.)

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