The most you would be willing to pay is the present value of ($12,000) per year for

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The most you would be willing to pay is the present value of $$12,000$ per year for 10 years at a 15 percent discount rate. The cash flows here are in ordinary annuity form, so the relevant present value factor is:

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This is the most you would pay.

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Fundamentals Of Corporate Finance

ISBN: 9780072313000

5th Edition

Authors: Stephen A Ross, Randolph W Westerfield

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Question Posted: May 22, 2024 06:01 AM

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The most you would be willing to pay is the present value of ($12,000) per year for

Question:

Annuity present value factor (1-Present value factor)/r [1 (1/1.150.15 = (1-.2472)/.15 = 5.0188 The present value of the 10 cash flows is thus: Present value = $12,000 5.0188 = $60,225

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Fundamentals Of Corporate Finance

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