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If the interest rate is 8%, which of these investments would you prefer? A. A perpetuity of $40 a year B. A payment of $342.17

If the interest rate is 8%, which of these investments would you prefer?

A.
A perpetuity of $40 a year

B.
A payment of $342.17 today

C.
A single payment of $600 in year 3

D.
A payment of $40 a year for 20 years

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Previous Question Next Question

	A.	A perpetuity of $40 a year
	B.	A payment of $342.17 today
	C.	A single payment of $600 in year 3
	D.	A payment of $40 a year for 20 years

Question

If the interest rate is 8%, which of these investments would you prefer? A. A perpetuity of $40 a year B. A payment of $342.17

If the interest rate is 8%, which of these investments would you prefer? A. A perpetuity of $40 a year B. A payment of $342.17 today C. A single payment of $600 in year 3 D. A payment of $40 a year for 20 years

Step by Step Solution

Step: 1

Get Instant Access to Expert-Tailored Solutions

Step: 2

Step: 3

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If the interest rate is 8%, which of these investments would you prefer?

A.
A perpetuity of $40 a year

B.
A payment of $342.17 today

C.
A single payment of $600 in year 3

D.
A payment of $40 a year for 20 years