. A certain manufacturing plant is being sold and was submitted for bidding. Two bids were submitted by interested buyers. The first bid offered to pay P200,000 each year for 5 years, each payment being made at the beginning of each year. The second bidder offered to pay P120,000 for the first year, P150,000 the second year, P180,000 the third year P200,000 each year for the next 2 years, all payments being made at the beginning of each year. If money is worth 12% compounded annually, which bid should the owner of the plant accept? Show cashflow diagram.
. A certain manufacturing plant is being sold and was submitted for bidding. Two bids were submitted by interested buyers. The first bid offered to pay P200,000 each year for 5 years, each payment being made at the beginning of each year. The second bidder offered to pay P120,000 for the first year, P150,000 the second year, P180,000 the third year P200,000 each year for the next 2 years, all payments being made at the beginning of each year. If money is worth 12% compounded annually, which bid should the owner of the plant accept? Show cashflow diagram.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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5. A certain manufacturing plant is being sold and was submitted for bidding. Two bids were submitted by interested buyers. The first bid offered to pay P200,000 each year for 5 years, each payment being made at the beginning of each year. The second bidder offered to pay P120,000 for the first year, P150,000 the second year, P180,000 the third year P200,000 each year for the next 2 years, all payments being made at the beginning of each year. If money is worth 12% compounded annually, which bid should the owner of the plant accept? Show cashflow diagram.
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