Suppose that Ed Scahill owns a farm in a small town. In exchange for allowing a road
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Suppose that Ed Scahill owns a farm in a small town. In exchange for allowing a road to pass through his farmland, the town has agreed to pay Ed and future owners of the land $135 per year in perpetuity. Now, however, the town has offered, and he has accepted, a one-time payment of $1,125 in exchange for his giving up the right to receive the annual $135 payment. What implicit interest rate have Ed and the township used in arriving at this settlement?
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Money Banking And The Financial System International Edition
ISBN: 978-1292000183
2nd Edition
Authors: R. Glenn Hubbard ,Anthony P Obrien
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