Annual payments that grow at constant rate forever

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1. KIMMY is planning to sell his car, truck, and van. He expects to sell each of the three vehicles for the same, positive cash flow of $A. n inflows from the sales are the only cash flows associated with the various vehicles. Based on this information only, which one of the following assertions is true? A. The truck is the most valuable vehicle. B. Answer is not listed or is not possible C. The van is the most valuable vehicle. D. Two of the vehicles will have the same value and it will be greater than the third vehicle. E. The car is the most valuable vehicle.

2. Theon has retired and will receive regular annual payments that grow at a constant rate forever. Two years from now he expects to receive a payment of $1,200. He expects to receive $2,400 in twenty-two years from today. How much will Theon receive in 10 years from today? A. $1,598.23 B. $1,697.06 C. $1,680.01 D. Answer is not listed or is not possible E. $1,583.41.

Reference no: EM131990087

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