The Always Late Construction Co. is about to sell some used equipment to Early Leasing. Always Late has offered the following two payment schemes:
a. $50,000 now and $300,000 at the end of ten years.
b. $50,000 now, $25,000 at the end of each of the next six years.
If the applicable discount rate for either transaction is 12%, which would be the better alternative for Early? Why?

Question

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The Answer of The Always Late Construction Co. is about to sell some used equipment to Early Leasing. Always Late has offered the following two payment schemes:
a. $50,000 now and $300,000 at the end of ten years.
b. $50,000 now, $25,000 at the end of each of the next six years.
If the applicable discount rate for either transaction is 12%, which would be the better alternative for Early? Why?