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Options for drop down to ___ offers the greater value are Shrink or Grow. Shirley has been offered two perpetuities: Grow and Shrink. Grow promises
Options for drop down to ___ offers the greater value are Shrink or Grow.
Shirley has been offered two perpetuities: Grow and Shrink. Grow promises her $93 in one year and an annual cash flow that will increase by 5 percent per year forever. Shrink, in contrast, promises her $990 in one year but the annual cash flow will decline by 3 percent forever. If her opportunity cost is 6 percent per year and both annuities cost $990. Which annuity offers her the greater value? (Round answers to 2 decimal places, e.g. 125.12.) Grow exceeds the cost by $ Shrink exceeds the cost by offers the greater valueStep by Step Solution
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