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Assume that your grandmother wants to give you generous gift. She wants you to choose which one of the following sets of cash flows you would like to receive: Option A: Receive a one-time gift of $ 10,
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Jan 8, 2021
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Assume that your grandmother wants to give you generous gift. She wants you to choose which one of the following sets of cash flows you would like to receive: Option A: Receive a one-time gift of $ 10,000 today. Option B: Receive a $1400 gift each year for the next 10 years. The first $1400 would be received 1 year from today. Option C: Receive a one-time gift of $17,000 10 years from today. Compute the Present Value of each of these options if you expect the interest rate to be 3% annually for the next 10 years. Which of these options does financial theory suggest you should choose?
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Sebastien Servouze
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Answer:
The best option is Option A.
Step-by-step explanation:
Vincent G
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Jan 13, 2021
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Vincent G
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