# Please explain how to get the PV factor thank you! Question 3 --/1 View Policies Current... Please explain how to get the PV factor thank you!

Question 3 --/1 View Policies Current Attempt in Progress Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of \$2,519,000, or it can make annual payments of \$308,100 for 15 years, each payment due on the last day of the year. Click here to view factor tables Which method of payment do you recommend, assuming an expected effective interest rate of 9% during the future period? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g.458,581.) Present Value of annual payments \$ Recommended payment method

 Answer alternative 1 Present value under alternative 1=\$25,19,000 alternative 2 Present value under alternative 2=\$308,100*Present value of annuity factor(9%,15) 308,100*8.060688 \$2,483,498 (approx) Hence option 2 is better involving lesser present values.
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