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Unformatted text preview: how you would go from a monthly interest rate to an annual interest rate. 3. Suppose that in exchange for allowing a road to pass through his farmland, John had been promised that he and future owners of his land will be paid $135 per year, in perpetuity, by the township he lives in. Now, however, the township has offered a one-time payment of $1125, in exchange for his giving up the right to receive the annual $135 payment. If John believes that interest rates are 10%, then should John accept this offer? At what interest rate would John be indifferent between taking the offer or rejecting it? 4. Questions and Problems from the text: 2 and 8...
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This note was uploaded on 11/06/2011 for the course ECON V31.0231â taught by Professor Aditi during the Fall '11 term at NYU.
- Fall '11