Create a payment plan, The CFO of your company has asked

Create a payment plan

Assignment Help Managerial Accounting

Reference no: EM13171302

Question

Your company is interested in having a new facility constructed. The contractor expects that it will take approximately 3 years to complete the building. The contractor has offered you three payment plans for the building. They are as follows:

Time	Plan 1	Plan 2	Plan 3
Today	$100,000	$820,000	$500,000
1 year from now	$1,100,000	$820,000	$0
2 years from now	$1,100,000	$820,000	$1,400,000
3 years from now	$1,100,000	$820,000	$1,400,000

The CFO of your company has asked you to provide recommendation concerning which payment plan to accept. What is your recommendation? Assume your weighted-average cost of capital is 10%.

Reference no: EM13171302

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