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Finance Help: Value of a mixed stream Harte Systems, Inc., a maker of electronic survillance
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Finance Help: Value of a mixed stream Harte Systems, Inc., a maker of electronic survillance
Value of a mixed stream Harte Systems, Inc., a maker of electronic survillance equipment, is considering selling the rights to market its home security system to a well-known hardware chain. The proposed deal calls for the hardware chain to pay Harte $32000 and $25 000 at the end of years 1 and 2 and to make annual year-end payments of $12 000 in years 3 through 9. A final payment to Harte of $20 000 would be due at the end of year 10.
a. Select the time line that represents the cash flows involved in the offer.
b. If Harte applies a required rate of return of 9% to them, what is the present value of this series of payments?
c. A second company has offered Harte an immediate one-time payment of $110 000 for the rights to market the home security system. Which offer should Harte accept?
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