Jenkins Security has learned that a rival has offered to supply a carpark with security for ten years for $50,000 up front and a further $20,000 per year. If Jenkins Security offers to provide security for eight years for an upfront cost of $70,000 and a separate yearly payment, what is the maximum that this yearly payment can be so that Jenkins' offer matches the equivalent annual annuity of their rival's offer? (Assume a cost of capital of 6%.)

Question

Quizplus · Accepted Answer

The Answer of Jenkins Security has learned that a rival has offered to supply a carpark with security for ten years for $50,000 up front and a further $20,000 per year. If Jenkins Security offers to provide security for eight years for an upfront cost of $70,000 and a separate yearly payment, what is the maximum that this yearly payment can be so that Jenkins' offer matches the equivalent annual annuity of their rival's offer? (Assume a cost of capital of 6%.)

Jenkins Security Has Learned That a Rival Has Offered to Supply