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Sara wishes to purchase a stereo system. She is offered the following payment options: Option 1: $ 0 down $ 435 in 1 year $
Sara wishes to purchase a stereo system. She is offered the following payment options:
Option 1:
$ 0 down
$ 435 in 1 year
$ 300 in 2 years
Option 2:
$ 85 down
$ 250 in 1 year
$ 400 in 2 years
Determine the range of interest rates for which the present value of Option 2 is less than the present value of Option 1.
Option 1:
$ 0 down
$ 435 in 1 year
$ 300 in 2 years
Option 2:
$ 85 down
$ 250 in 1 year
$ 400 in 2 years
Determine the range of interest rates for which the present value of Option 2 is less than the present value of Option 1.
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Handbook Of The Economics Of Finance Volume 2A
Authors: George M. Constantinides, Milton Harris, Rene M. Stulz
1st Edition
0444535942, 978-0444535948
