Question: Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement: It can either make immediate payment of $3,500,000,

Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement: It can either make immediate payment of $3,500,000, or it can make annual payments of $400,000 for 15 years, each payment due on the last day of the year.

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Which method of payment do you recommend, assuming an expected effective-interest rate of 8% during the future period?

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