You sell a software product that you developed and receive three payment options: Option I...

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You sell a software product that you developed and receive three payment options: • Option I is to receive a lump sum payment of $1,000,000 now. • Option II is to receive a lump sum payment of $1.200,000 three years from now. Option III is to receive payment at a rate of 70000t² dollars/year for the next three years, where t is time from the present in years. The 1st payment starts one year after. Assume you can get 5% interest, compounded continuously. Which option leaves you with the most money after three years? You sell a software product that you developed and receive three payment options: • Option I is to receive a lump sum payment of $1,000,000 now. • Option II is to receive a lump sum payment of $1.200,000 three years from now. Option III is to receive payment at a rate of 70000t² dollars/year for the next three years, where t is time from the present in years. The 1st payment starts one year after. Assume you can get 5% interest, compounded continuously. Which option leaves you with the most money after three years?

Answer rating: 100% (QA)

To compare the three payment options we need to calculate their present values using the cont... View the full answer