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In your spare time, you start looking at some investment advertisements online. a) The first one that intrigues you says, Pay us $90 a year
In your spare time, you start looking at some investment advertisements online.
a) The first one that intrigues you says, "Pay us $90 a year for 9 years (first payment 1 year from today), and we will pay you $90 a year thereafter in perpetuity (starting in year 10)." Is there any discount rate for these cash flows that makes this a good deal? If NO, explain why. If YES, say whether the discount rate must be GREATER THAN or LESS THAN what rate? (You can round the rate to the nearest percent).
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