Joy Don Corp. sells a building to Trifle and Life in exchange for a note. The note
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Joy Don Corp. sells a building to Trifle and Life in exchange for a note. The note specifies a lump¬ sum payment of $300,000 ten years in the future and annual payments (beginning today) of $2,000 at the beginning of each year for ten years. Assume an annual interest rate of 10 percent. Chapter 4 The Measurement Fundamentals of Financial Accounting 179 REQUIRED:
a. Would Joy Don be wise to accept $110,000 now instead of the note? Why or why not?
b. At what interest rate would Joy Don be wise to accept the $110,000 instead of the note? {Hint: Use a trial and error approach. The answer is an integer.)
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