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Alysha has been offered two perpetuities: Grow and Shrink. Grow promises her $ 2 0 0 in one year and an annual cash flow that
Alysha has been offered two perpetuities: Grow and Shrink. Grow promises her $ in one year and an annual cash flow that will
increase by percent per year forever. Shrink, in contrast, promises her $ in one year but the annual cash flow will decline by
percent forever. If her opportunity cost is percent per year and both annuities cost $ which annuity offers her the greater
value? Round "Shrink cost" to decimal places, eg and other answer to decimal places, eg
Grow exceeds the cost by
Shrink exceeds the cost by
offers the greater value.
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