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5) a) Suppose you are examining an asset that promised to pay $500 at the end of each of the next three years. The cash
5) a) Suppose you are examining an asset that promised to pay $500 at the end of each of the next three years. The cash flows from this asset are in the form of a three-year, $500 annuity. If we want to earn 10 percent on your money, how much would you will offer for this annuity? 2 Designated area for pasting the picture b) Suppose you need $10,000 in one year for the down payment on a new car. If you can earn 7% annually, how much do you need to invest today? 2 Designated area for pasting the picture
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