Question: Assume that Aoki Ltd. has a contractual debt outstanding. Aoki has available two means of settlement: It can either make immediate payment of 3,500,000, or

Assume that Aoki Ltd. has a contractual debt outstanding. Aoki 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 (yen in thousands)

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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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