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You will receive $ 2 0 0 a year for the next eight years from an insurance settlement. The interest rate is 6 percent for
You will receive $ a year for the next eight years from an insurance settlement. The interest rate is percent for the first three years and percent for the final five years. What is this settlement worth to you today?
$
Consider the following four alternatives:
$ received in two years.
$ received in five years.
$ received in eight years.
$ received in ten years.
The ranking of the four alternatives from most valuable to least valuable if the interest rate is per year would be:
time
Consider a growing perpetuity that will pay $ in one year. Each year after that, you will receive a payment on the anniversary of the last payment that is larger than the last payment. This pattern of payments will continue forever. If the interest rate is then the value of this perpetuity is:
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