Question

Problem 2. A high specialty hospital is analyzing the option of outsourcing the gardening and maintenance service of green areas within its facilities. The supplier company offers you two payment formats to cover a three-year contract:
(1) Settle monthly an amount of $ 3,750 for the service. Monthly payments would be made at the end of each month.
(2) Contribute $ 80,000 at the time of signing the contract, and then settle two payables for an amount of $ 25,000 at the end of months 18 and 36.
Determine the best course of action between accepting option 1 or 2, considering that the institution may resort to an investment alternative (or return) of 9% per year with monthly capitalization.

Questions

Equivalent value of option 1 at the start of the contract Option 1 = $

Equivalent value of option 2 at the start of the contract Option 2 = $

Recommendation for the person (course of action):

Equivalent value of option 1 at the end of the contract Option 1 = $

Equivalent value of option 2 at the end of the contract Option 2 = $

Recommendation for the person (course of action):

Answer 1

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