Question: Assuming the same facts as those in E6-18B except that the payments must begin now and be made on the first day of each of

Assuming the same facts as those in E6-18B except that the payments must begin now and be made on the first day of each of the 10 years, what payment method would you recommend?

In E6-18B, Assume that Muhammed Corporation has a contractual debt outstanding. Muhammed has available two means of settlement: It can either make immediate payment of $1,500,000, or it can make annual payments of $200,000 for 10 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 6% during the future period?

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