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CONCEPTS OF FUTURE AND PRESENT VALUE Exercise 1: You have won a lottery of $300,000. You have two options to consider: 1. Invest the money
CONCEPTS OF FUTURE AND PRESENT VALUE Exercise 1: You have won a lottery of $300,000. You have two options to consider: 1. Invest the money at the local bank now for five years and earn 12% interest per year. 2. Wait until next year when interest rate increase to 14% per year and invest the money for four years. Exercise 2: Suppose you invest $2,500 in a bank at the rate of 14 percent per year. What will be the four investment in six years
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