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Coso Corporation is comparing two investment options that each pay 6 percent interest, compounded annually. Both options will provide Coso with $12,000 of income. Option
Coso Corporation is comparing two investment options that each pay 6 percent interest, compounded annually. Both options will provide Coso with $12,000 of income. Option X pays $2,000 the first year followed by two annual payments of $5,000 each. Option Y pays three annual payments of $4,000 each. Which one of the following statements is correct given these two investment options? Assume a positive discount rate. (No calculations needed.) Multiple Choice Both options are of equal value since they both provide $12,000 of income. Option X has the higher future value at the end of Year 3. O Option Y has a higher present value at Time O. O Option X is an annuity
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