1. Jim Nance has been offered an investment that will pay him $210 three years...
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Finance
1. Jim Nance has been offered an investment that will pay him
$210
three years from today.
a.If his opportunity cost is
4%
compounded annually, what value should he place on this opportunity today?
b.What is the most he should pay to purchase this payment today?
c. If Jim can purchase this investment for less than the amount calculated in part
(a),
what does that imply about the rate of return that he will earn on the investment?
2.In exchange for a $23 000 payment today, a well-known company will allow you to choose one of the alternatives shown in the following table: LOADING.... Your opportunity cost is 9%. a.Find the value today of each alternative. b.Are all the alternatives acceptablethat is, worth at least $23 000 today? c.Which alternative, if any, will you take?
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