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Suppose you are offered an investment on January 1, 1994 with the following promised cash flows: Date promised Amount June 30, 1994 $50 December 31,
Suppose you are offered an investment on January 1, 1994 with the following promised cash flows: Date promised Amount June 30, 1994 $50 December 31, 1994 $50 June 30, 1995 $50 December 31, 1995 $1,050 If you require a 6% annual percentage rate (APR) on your investments, what is the most you will be willing to pay for this investment?
$965
$1,030
$1,074
$1,200
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