Question
11. (6 points) You are offered two investment opportunities with the following cash flow starting from a year today. Year 1 Year 2 Year 3
11. (6 points) You are offered two investment opportunities with the following cash flow starting from a year today.
Year 1 Year 2 Year 3 Year 4
A 1,800 2,600 2,000 1,850
B 1,200 2,200 1,800 1,900
You can get A at a cost of C and B at a cost of C+100 at time 0 (today). The value of option A is twice as much as option B to you today. If your alternative is earning 6% annually in the market, what is C ?
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Principles Of Finance
Authors: Besley, Scott Besley, Eugene F Brigham, Brigham
4th Edition
0324655886, 9780324655889
