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You have an opportunity to buy a Magic Box. At the time of purchase the Box spits out $100. It will then give you $60
You have an opportunity to buy a Magic Box. At the time of purchase the Box spits out $100. It will then give you $60 on the anniversary of its purchase for the next 7 years. After that it pays you $40 per year forever. What is the value of the Box? Use a discount rate of 6%. If the Box were a tradable security, what would be the NPV of the purchase?
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