Jing Associates, LLC, a large law firm in Denver, is building a new office. To pay for the construction, Jing Associates is selling a security that will pay the investor the lump sum of $38,600 in nine years. The current market price of the security is $16,429.

Assume that you can earn an annual return of 8.25% on your next most attractive investment.

From strictly a financial perspective, why or why not?

A.

Because the discounted value of the security's future cash flows is greater than the cost of the security

B.

Because the cost of the security is greater than the discounted value of the security's future cash flows.