Question
Your rich godfather has offered you a choice of one of the three following alternatives: N$10,000 now; N$2,000 per year for 8 years; or N$24,000
Your rich godfather has offered you a choice of one of the three following alternatives: N$10,000 now; N$2,000 per year for 8 years; or N$24,000 at the end of 8 years. Assuming you could earn 11 percent per annum compounded semi-annually.
(i) Which alternative should you choose?
(ii)If you could earn 12 percent per annum, compounded quarterly, would you still choose the same alternative?
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Financial Management Principles and Applications
Authors: Sheridan Titman, Arthur Keown, John Martin
12th edition
133423824, 978-0133423822
