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Rent payment for a new office building. Assuming an interest rate of 12% compounded monthly, which payment plan is better?

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Figuring out the best plan to structure the rent payment for a new office building...

Alternatives are:

Plan A Annual payment of $15,000 at the end of each year.
Plan B Monthly payments of $1,200 at the end of each month.

Assuming an interest rate of 12% compounded monthly, which payment plan is better?

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Solution Summary

The expert examines rent payments for a new office building with 12% interest rates.

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Please see the attached file.

Given Plan A

Annual Payment = $ 15,000

Plan B:

Monthly interest rate = 12 % / 12 = 1 ...

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