Question
Assume that Mother Goose is buying Humpty Dumptys omelet business. Which of the following gives Humpty Dumpty the highest Current Economic Value (PV now) for
Assume that Mother Goose is buying Humpty Dumptys omelet business. Which of the following gives Humpty Dumpty the highest Current Economic Value (PV now) for the sale of the business today?
| a. | No Down Payment today with 20 semi-annual payments beginning in 6-months. Each payment is for $160,000. The appropriate APR is 6%. | |
| b. | $ 1,800,000 cash today and that is the full purchase price as there will be no future payments. | |
| c. | $ 500,000 down-payment today with 20 semi-annual payments beginning in 6-months. Each payment is for $120,000. The appropriate APR is 6%. | |
| d. | $ 500,000 down-payment today with 10 annual payments beginning in 1 year for $160,000 per year. The appropriate APR is 6%. |
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Authors: Robin Wigglesworth
1st Edition
0593087682,0593087690
