Neil Tyson has developed a prototype of an armored fabric that is very light, but is capable of stopping projectiles as efficiently as a traditional bullet-proof jacket. A military supplier is considering the technology and has offered to pay Neil £30,000 in years 1, 2, and 3; and £40,000 in years 4 to 6.

All payments will be made at the end of each year.

a. Lay out the cash flows involved in the offer on a timeline.

b. If Neil applies a required rate of return of 10% to them, what is the present value of this series of payments?

c. Another company has made an offer of a one-time payment of £275,000 for the fabric. Which offer should Neil accept?