Question
hello! could you help me about the solution of the question below? Thanx Charlotte is negotiating a prenuptial agreement with Bunny. Under the agreement, Charlotte
hello! could you help me about the solution of the question below? Thanx
Charlotte is negotiating a prenuptial agreement with Bunny. Under the agreement, Charlotte will be receiving 20% of $500K every two years (with the first payment occurring two years after the wedding). Bunny claims that under the agreement, and provided that the marriage lasts for 10 years, Charlotte is worth $500K. (a) Charlotte has some doubts, and talks it over with Miranda, who has studied some finance during her law school education. Miranda claims that under the agreement, Charlotte is worth significantly less than $500K. Why is Miranda right, and what is her argument? (b) Miranda advises Charlotte to negotiate an agreement under which she is worth $700K. What should each of the 5 (equal) payments be, provided that Charlottes annual discount rate is 5%?
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