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11) Your rich uncle is offering you a gift that you will accept today. Your uncle wants you to choose between one of two investments:
11) Your rich uncle is offering you a gift that you will accept today. Your uncle wants you to choose between one of two investments: I. An annuity that will start paying $600 for 10 years. The annuity's first payment will take place 5 years from today. The annual interest rate is 12%. I. A growing perpetuity that 1 year from now will start paying $200 and is expected to grow at an annual rate of 2% forever. The discount rate is 12%. Calculate the present value of the two investments. Which one would you accept?
11) Your rich uncle is offering you a gift that you will accept today. Your uncle wants you to choose
between one of two investments:
I. An annuity that will start paying $600 for 10 years. The annuity's first payment will take place
5 years from today. The annual interest rate is 12%.
I. A growing perpetuity that 1 year from now will start paying $200 and is expected to grow at
an annual rate of 2% forever. The discount rate is 12%.
Calculate the present value of the two investments. Which one would you accept?
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Auditing In The Public Sector Efficiency Economy And Program Results
Authors: James L. Savage, Felix Pomeranz, Alfred J. Cancellieri, Joseph B. Stevens
1st Edition
0882621238, 978-0882621234
