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August 3, 2015

Homework Help: accounting help please?!

Posted by Jay on Thursday, September 2, 2010 at 2:18pm.

Nancy Sly wishes to sell her business and receives the following three offers:?
1. $568,000 cash immediately.

2. $200,000 cash now plus an annual installment of $60,000 at the end of each year for 10 years, a total of $800,000.

3. An offer to manage the property for 10 years that would yield her $96,000 cash at the end of each of the 10 years. She would have to make an initial investment of $20,000 cash now. Total cash received is $940,000.

Equally risky alternatives yield 10% per year.

Which offer is the best and why. To make an good response you need to compare the present value of each offer.

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