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is om A) S ud prefer empodig over my condi B) The effective marate decreases the number of compending The effective anal rate as the
is om A) S ud prefer empodig over my condi B) The effective marate decreases the number of compending The effective anal rate as the percentage rate when interest compounded annually D) Borrowers would prefer monthly compounding over compounding on same annual percentage rate. Por any rate of interest the percentage rate will always exceed the effective annual rate. - You want to start a business that you believe in reduce cash flows of $5,600,5480200 and $125.000 at the end of each of the next three years, respectively. At the end of three years you think you can sell the business for $250,000. At a discount rate of 16 percent business worth today? A) $258,803.02 B) S314,011.33 C) $280.894.67 D) $325.837.81 E) S297,077.17 25) You have some property for sale and have received two offers. The first offer is for $89,500 today in cash. The second offer is the payment of $35,000 today and an additional guaranteed $70,000 two years from today. If the applicable discount rate is 11.5 percent, which offer should you accept and why? A) You should accept the $89,500 today because it has the higher net present value. B) You should accept the $89,500 today because it has the lower future value. C) You should accept the first offer as it is a lump sum payment. D) You should accept the second offer because it has the larger net present value. E) It does not matter which offer you accept as they are equally valuable. 26) Chang Lee is going to receive $20,000 six years from now. Soo Lee is going to receive $20,000 nine years from now. Which one of the following statements is correct if both individuals apply a discount rate of 7 percent? A) The present values of Chang Lee's and Soo Lee's money are equal. B) In future dollars, Soo Lee's money is worth more than Chang Lee's money. C) In today's dollars, Chang Lee's money is worth more than Soo Lee's. D) Twenty years from now, the value of Chang Lee's money will equal the value of Soo Lee's money. E) Soo Lee's money is worth more than Chang Lee's money given the 7 percent discount te
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