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14 a Suppose a broker offers you an investment that will provide the following future cash flows: $1000 in exactly 1 year $2000 in exactly
14
a Suppose a broker offers you an investment that will provide the following future cash flows: $1000 in exactly 1 year $2000 in exactly 2 years $4000 in exactly 3 years 58000 in exactly 4 years Your broker tells you that you will receive an average return of 13.46% if you pay $10,000 for this investment today. Suppose that you require a rate of 12% on this Investment. Which of the following is true? A. It is impossible to calculate the value of these cash flows 8. You consider the current price of $10,000 to be too expensive. C. You would pay $10,000, but only if the future cash flows are higher D. You would be willing to pay more than $10,000 today for these exact future cash flows. OO Step by Step Solution
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