The CSI Company is considering selling its School of Business to Harvard University. The proposed deal...

The CSI Company is considering selling its School of Business to Harvard University. The proposed deal would require Harvard to pay CSI $30,000 and $25,000 at the end of years 1 and 2, and to also make yearly payments (at the end of the year) of $15,000 in years 3 thru 9. Harvard would make a final payment to CSI for $10,000 at the end of year 10. If the discount rate is 12% what is the present value of this series of payments?

	a.	$54,585
	b.	$105,250
	c.	$109,160
	d.	$104,520
	e.	$54,735
	f.	none of the above

Solutions

Expert Solution

Present value= Sum of CF*(PVIF 12%,n)

Where n= the year of receipt

Present value= $104,520

Answer is choice (d)

Calculation as below:

jeff jeffy answered 1 year ago

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