Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 56

As an innovative way to pay for various software packages, a new high tech service company has offered to pay your company, Custom Computer Services (CCS), in one of three ways: (1) pay $480,000 now, (2) pay $1.1 million 5 years from now, or (3) pay an amount of money 5 years from now that will have the same purchasing power as $850,000 now. If you, as president of CCS, want to earn a real interest rate of 10% per year when the inflation rate is 6% per year, which offer should you accept