When Rutherford Steels bid for an infrastructure project, the company was offered the following two payment options:
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Question:
- When Rutherford Steels bid for an infrastructure project, the company was offered the following two payment options:
Option A: A payment of $750,000 at the end of one year, which is the scheduled completion time for the project.
Option B:$100,000 advance payment on commencement of the project and the balance payment in two years.
If the two payments are economically equivalent and the interest rate is 3% compounded semi-annually, calculate the balance payment from Option B
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