Question

Determine the value of x, for a company’s two investment alternatives to be equivalent at an interest rate of 15\% per year:

Option 1. Invest $45 at the end of the first year. Starting from the end of 7-th(nd/rd/st) year, the company gets sales of $x for 2 years, followed by $1.2x for 9 years, and $x for 2 years.

Option 2. Invest $45 at year 0, and the company starts to get sales $45 at the end of year 9, increment by 1 cumulatively until at the end of year 15 (e.g., at end of year 10 is 46).

Answer 1