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Huang can receive one of the following two payment streams: Payment stream 1 : $ 5 0 0 at time 0 , $ 7 5
Huang can receive one of the following two payment streams:
Payment stream : $ at time $ at time n years, and $ at time n years
Payment stream : $ at time n years and at time years
At an annual effective interest rate of i at time the present values of the two payment streams are
equal. Given vn can be used to calculate n using which you can calculate i
HINT: Write an expression for each payment stream to represent the present value at time and
equate the two expressions, then solve for i
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