Invest in a financial asset that is expected to generate

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Reference no: EM131026101

You invest in a financial asset that is expected to generate $500 in year 1, $300 in year 2, and $600 in year 3. The required rate of return on your investment is 8%. Which of the following statements is true?

The fair price to you today is the future value of all three future cash flows at 8%.

The fair price to you today must be higher than $1,400.

The fair price to you today is exactly $1,400.

The fair price to you today is the present value of all three future cash flows at 8%.

Reference no: EM131026101

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