Question
What is the real value of each of the following option? (Assume 9% interest rates) Option 1: Nine (9) annual payments of four hundred and
What is the real value of each of the following option? (Assume 9% interest rates)
Option 1: Nine (9) annual payments of four hundred and seventy five thousand dollars ($475,000) each year, with the first payment to be made one year from now, and each succeeding payment to be made one year after the previous one.
Option 2: Seven (7) annual payments of five hundred thousand dollars ($500,000) each, with the first payment due immediately, and each succeeding payment being made one year after the previous one.
Option 1: An immediate payment of $3 million.
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