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Fully consider the following investments and their corresponding sets of cash flows: Investment A pays us $500 at the end of year 1 and $1,000
Fully consider the following investments and their corresponding sets of cash flows:
Investment A pays us $500 at the end of year 1 and $1,000 at the end of year 2.
Investment B pays us $120 forever. Investment C pays us $200 at the end of each year for the next ten years.
If we assume that the rate of return or r is 10% for each of these investments, which investment (set of cash flows) is worth the most to us today? How?
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