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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
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
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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
Transcribed Image Text: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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