|A firm sells the same material with two separate payment plans. 1. According to the 1st payment plan, the payment period is 12 months, each monthly payment is 10 837 000 $, and an interim payment of 12 million $ is required at the end of the 6th month. 2. In the 2nd payment plan, the payment period is 18 months, each monthly payment is 7 965 000 $ and an interim payment of 36 million $ is required at the end of the 12th month. Annual nominal interest rate for both options is 60%. Which payment plan would you recommend? In payments, discrete compound interest is applied

|A firm sells the same material with two separate payment plans. 1. According to the 1st payment plan, the payment period is 12 months, each monthly payment is 10 837 000 $, and an interim payment of 12 million $ is required at the end of the 6th month. 2. In the 2nd payment plan, the payment period is 18 months, each monthly payment is 7 965 000 $ and an interim payment of 36 million $ is required at the end of the 12th month. Annual nominal interest rate for both options is 60%. Which payment plan would you recommend? In payments, discrete compound interest is applied

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

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A firm sells the same material with two separate payment plans.1. According to the 1st payment plan, the payment period is 12 months, each monthly payment is 10.837.000 TL, and an interim payment of 12 million TL is required at the end of the 6th month.2. In the 2nd payment plan, the payment period is 18 months, each monthly payment is 7.965.000 TL and an interim payment of 36 million TL is required at the end of the 12th month. Annual nominal interest rate for both options is 60%. Which payment plan would you recommend? In payments, discrete compound interest is applied.
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