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Pacific Northern Corp




Pacific Northern Corp. needs new manufacturing equipment. Two companies can provide similar equipment but under different payment plans;a. Henderson Manufacturing offers to let Pacific Northern pay $60,000 each year for five years. The payments include interest at 12% per year. What is the present value of the payments?;b. Southern Corp. will let Pacific Northern make a single payment of $400,000 at the end of five years. This payment includes both principal and interest at 12%. What is the present value of this payment?;c. Pacific Northern will purchase the equipment that costs the least, as measured by present value. Which equipment should Pacific Northern select? Why?;Annuity Annuity of $1 at 12% for 5 years (Exhibit 12A-7)" Present Value;a. Henderson;Present Value of $1 at 12% for 5 years (Exhibit 12A-6) Present Value;b. Southern


Paper#79592 | Written in 18-Jul-2015

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