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Consider two investment opportunities. The first promises to make fixed quarterly payments of $1200 for 20 years, but the payments do not start until...

Consider two investment opportunities. The first promises to make fixed quarterly payments of

$1200 for 20 years, but the payments do not start until 4 years from now. The second promises to

make fixed annual payments of $6000 forever, but the payments do not start until 8 years from

now. If the required return for both is 8%, which one do you prefer? How much would you be

willing to pay for each of these investments?

Top Answer

Second Investment opportunity will be preferred as it has a higher... View the full answer

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