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You are considering between 2 investments: A and B. Investment A will pay you $100 per year forever with the first cash flow occurring 11
You are considering between 2 investments: A and B. Investment A will pay you $100 per year forever with the first cash flow occurring 11 years from today. Investment B will pay you $90 per year forever with the first cash flow also occurring 11 years from today; however, the cash flow amounts are expected to grow at 1% forever. Assume interest rates are expected to be 6.125% every year forever; What is Investment A worth today? (3 marks) b. What is Investment B worth today? (4 marks) Which investment would you choose? (1 mark) c
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