) Harte Systems, Inc., a maker of electronic surveillance 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 $30,000 and $25,000 at the end of years 1 and 2 and to make annual year-end payments of $15,000 in years 3 through 9. A final payment to Harte of $10,000 would be due at the end of year 10.
i. Lay out the cash flows involved in the offer on a time line.
ii. If Harte applies a required rate of return of 12% to them, what is the present value of this series of payments?
iii. 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?
the current value from the first company is greater than the offer of the second. therefore, the offer of the second company is inappropriate