You have decided to purchase a new piece of mining equipment for your company. As CFO it is your responsibility to select which one is best for your company. You will only consider the cost involved in making your decision.
Calculate the future value of the following options?
The relevant discount rate is 8% per annum, compounded annually.
1. Pay $1,000,000 today?
2. 5 yearly payments of $250,000 paid at the end of the year?
3. Pay $1,500,000 in five years time?