Please use the EXCEL FILE ONLY to solve the question. Pleasure if you show the process! 5.

 

Please use the EXCEL FILE ONLY to solve the question. Pleasure if you show the process!

  
 

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5. Suppose that you are comparing the following two payment plans. Since you are paying (not receiving) these amounts, the smaller, the better. In present value terms, which plan is better for you? Use 5% as a discount rate and use 1 year as discounting frequency. (That is, 5% is both an APR and an EAR.) time of payment (in years, from today) 0 1 23 payment amounts in: plan 1 1000000 500000 500000 0 plan 2 0 800000 800000 800000 in total present value of: plan 1 plan 2 5. Suppose that you are comparing the following two payment plans. Since you are paying (not receiving) these amounts, the smaller, the better. In present value terms, which plan is better for you? Use 5% as a discount rate and use 1 year as discounting frequency. (That is, 5% is both an APR and an EAR.) time of payment (in years, from today) 0 1 23 payment amounts in: plan 1 1000000 500000 500000 0 plan 2 0 800000 800000 800000 in total present value of: plan 1 plan 2

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Here is how we can graphically show the relationship between the discount rate and the difference be... View the full answer