Donnelly Excavating has received two offers on a used backhoe that Donnelly is advertising for sale. Offer 1 is for $10,000 down, $15,000 in 6 months, and $15,000 in 18 months. Offer is for $8000 down, plus two $17,500 payments

Donnelly Excavating has received two offers on a used backhoe that Donnelly is advertising for sale. Offer 1 is for $10,000 down, $15,000 in 6 months, and $15,000 in 18 months. Offer is for $8000 down, plus two $17,500 payments one and two years from now. What is the economic value today of each offer if money is worth 10.25% compounded semiannually? Which offer should be accepted?

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Posted Date: January 20, 2016 07:18:37