[Question text] You have some property for sale and have received two offers. The first offer is for RM89,500 today in cash. The second offer is the payment of RM35,000 today and an additional guaranteed RM70,000 two years from today. If the applicable discount rate is 11 percent, which offer should you accept and why? Select one: A. You should accept the RM89,500 today because it has the lower future value. B. You should accept the second offer because it has the larger net present value. C. You should accept the first offer as it is a lump sum payment. D. You should accept the RM89,500 today because it has the higher present value.
[Question text] You have some property for sale and have received two offers. The first offer is for RM89,500 today in cash. The second offer is the payment of RM35,000 today and an additional guaranteed RM70,000 two years from today. If the applicable discount rate is 11 percent, which offer should you accept and why? Select one: A. You should accept the RM89,500 today because it has the lower future value. B. You should accept the second offer because it has the larger net present value. C. You should accept the first offer as it is a lump sum payment. D. You should accept the RM89,500 today because it has the higher present value.
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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9 [Question text] You have some property for sale and have received two offers. The first offer is for RM89,500 today in cash. The second offer is the payment of RM35,000 today and an additional guaranteed RM70,000 two years from today. If the applicable discount rate is 11 percent, which offer should you accept and why?
Select one:
A. You should accept the RM89,500 today because it has the lower future value .
B. You should accept the second offer because it has the larger net present value .
C. You should accept the first offer as it is a lump sum payment.
D. You should accept the RM89,500 today because it has the higher present value.
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