Your group receives a phone proposal to invest in a new business. Thecaller informs you that it will take a $70,000 down payment and the investmentwill return $10,000 a year for the next 10 years. He tells you that theinvestment will return 14 percent. If current interest rates are 8 percent,what is the present value of this investment? How did the caller get14 percent?
Your group receives a phone proposal to invest in a new business. Thecaller informs you that it will take a $70,000 down payment and the investmentwill return $10,000 a year for the next 10 years. He tells you that theinvestment will return 14 percent. If current interest rates are 8 percent,what is the present value of this investment? How did the caller get14 percent?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 22P
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Your group receives a phone proposal to invest in a new business. The
caller informs you that it will take a $70,000 down payment and the investment
will return $10,000 a year for the next 10 years. He tells you that the
investment will return 14 percent. If current interest rates are 8 percent,
what is the present value of this investment? How did the caller get
14 percent?
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