15. You have some property for sale and have received two offers. The first offer is for $189,000today in cash. The second offer is the payment of $100,000 today and an additional $100,000two years from today. If the applicable discount rate is 8.75%, which offer should you acceptand why?●●Notes:Interest rates are given as annual rates. If the payments are monthly, then the annual interestrate needs to be divided by 12 in order to get the rate per month. Use monthly rates in yourcalculations when the payments are monthly. Similarly, if the payments are monthly, then N isthe number of months (not the number of years).Unless stated otherwise, assume that annuity payments occur at the end of the period (ordinaryannuity)Upload an Excel, Word, or PDF file showing the answer and the supporting calculations. Clearlyshow your work with all steps included. If you are using mathematical formulas, write theformulas with all steps to get to the answer. If you are using a financial calculator, write out allthe calculator keystrokes used. If you are using Excel, submit the file with formulas and the dataentered into the formula. Your work must be clearly visible. (Digging through your assignments

Solution:- When an amount is receivable in future and there are various alternatives available, that…

15. You have some property for sale and have received two offers. The first offer is for $189,000 today in cash. The second offer is the payment of $100,000 today and an additional $100,000 two years from today. If the applicable discount rate is 8.75%, which offer should you accept and why?

15. You have some property for sale and have received two offers. The first offer is for $189,000 today in cash. The second offer is the payment of $100,000 today and an additional $100,000 two years from today. If the applicable discount rate is 8.75%, which offer should you accept and why?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

15. You have some property for sale and have received two offers. The first offer is for $189,000
today in cash. The second offer is the payment of $100,000 today and an additional $100,000
two years from today. If the applicable discount rate is 8.75%, which offer should you accept
and why?
●
●
Notes:
Interest rates are given as annual rates. If the payments are monthly, then the annual interest
rate needs to be divided by 12 in order to get the rate per month. Use monthly rates in your
calculations when the payments are monthly. Similarly, if the payments are monthly, then N is
the number of months (not the number of years).
Unless stated otherwise, assume that annuity payments occur at the end of the period (ordinary
annuity)
Upload an Excel, Word, or PDF file showing the answer and the supporting calculations. Clearly
show your work with all steps included. If you are using mathematical formulas, write the
formulas with all steps to get to the answer. If you are using a financial calculator, write out all
the calculator keystrokes used. If you are using Excel, submit the file with formulas and the data
entered into the formula. Your work must be clearly visible. (Digging through your assignments

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Your uncle offers you a choice of $106,000 in 10 years or $43,000 today. Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods. a-1. If money is discounted at 9 percent, what is the present value of the $106,000? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value a-2. Which offer should you choose? $106,000 after 10 years O $43,000 today
If the present value of $500 expected to be received three years from today is $200, what is the discount rate?
Assume you won a million dollars in the Texas Lottery. You have two options: 1) collect S426,000 now or 2) receive $50,000 a year (end-of-year) for the next 20 years. Which option would you opt for assuming a 10% interest rate? Use an Excel formula to justify your choice.
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