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Harte? Systems, Inc., a maker of electronic survillance? equipment, is considering selling to a? well-known hardware chain the rights to market its home security system. The proposed deal calls for the hardware chain to pay Harte ?$32,000 and $23,000 at the end of years 1 and 2 and to make annual? year-end payments of $10,000 in years 3 through 9. A final payment to Harte of $20,000 would be due at the end of year 10.

a. If Harte applies a required rate of return of 88?% to? them, what is the present value of this series of? payments?

b. A second company has offered Harte an immediate? one-time payment of $100,000 for the rights to market the home security system. Which offer should Harte? accept?

Financial Management, Finance

  • Category:- Financial Management
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