Question: As an innovative way to pay for various software packages, a new high-technology service company has offered to pay your company in one of three

As an innovative way to pay for various software packages, a new high-technology service company has offered to pay your company in one of three ways:

(a) Pay $400,000 now

(b) Pay $1.1 million (in nominal dollars) five years from now

(c) Pay an amount five years from now that has the same buying power as $750,000 now

If you want to earn a real interest rate of 10% per year (minimum acceptable rate of return), and the inflation rate is 6% per year, which offer should you accept?

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