Question: Michael Security has learned that a rival has offered to supply a parking garage with security for ten years for $45,000 up front and a
Michael Security has learned that a rival has offered to supply a parking garage with security for ten years for $45,000 up front and a further $15,000 per year. Michael Security offers to provide security for eight years for an upfront cost of $60,000 and a separate yearly payment. What should the yearly payment be so that Michael'soffer matches the equivalent annual annuity of their rival's offer? (Assume a cost of capital of 5%.)
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