The city has won a court judgment against a local firm for polluting a stream. The firm has been ordered to make annual payments at the end of the next three years of $100,000 each. The city wishes to begin cleanup of the stream immediately, however. Estimated cleanup costs are estimated at $260,000. A bank has offered the city to buy the rights to receive the judgement at a discount, for around $250,000. If the interest rate on the city’s other accounts is 4%, should the city take the deal with the bank? Show computations to support your recommendation

Answer rating: 100% (QA)

To determine whether the city should take the banks offer we need to calculate the present value of ... View the full answer