Question
Sanjeev has received three offers to purchase his used combine. Farmer A has offered him $196,000 today and $107,000 four years from now. Farmer B
Sanjeev has received three offers to purchase his used combine. Farmer A has offered him $196,000 today and $107,000 four years from now. Farmer B has offered him $150,000 today and $37,200 every twelve months for four years. Farmer C has offered him five annual payments of $63,800 starting today. The prevailing interest rates are 9.25% compounded annually. For full marks your answer(s) should be rounded to the nearest dollar.
- Calculate the NPV of the offer from Farmer A.
NPV = $0.00
- Calculate the NPV of the offer from Farmer B.
NPV = $0.00
- Calculate the NPV of the offer from Farmer C.
NPV = $0.00
- Which offer should Sanjeev accept?
Sanjeev should accept the offer from
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Risk Sensitive Investment Management
Authors: Mark H A Davis, Sébastien Lleo
1st Edition
9814578037, 978-9814578035
