Ruth Nail receives two offers for her seaside home. The first offer is for $1 million today.

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Ruth Nail receives two offers for her seaside home. The first offer is for $1 million today. The second offer is for an owner-financed sale with annual payments as follows:

End of YearPayment

0 (Today)............$200,000

1.............. 200,000

2.............. 200,000

3.............. 200,000

4.............. 200,000

5.............. 300,000

Assuming that Ruth earns a rate of 8 % on her investments, which offer should she take?

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Introduction to Corporate Finance What Companies Do

ISBN: 978-1111222284

3rd edition

Authors: John Graham, Scott Smart

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Question Posted: Mar 26, 2015 06:19 AM

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Ruth Nail receives two offers for her seaside home. The first offer is for $1 million today.

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PV of ownerfinanced sale Ruth should take the second offer for the ser...View the full answer

Introduction to Corporate Finance What Companies Do

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