Joy Don Corp. sells a building to Trifle and Life in exchange for a note. The note
Question:
Joy Don Corp. sells a building to Trifle and Life in exchange for a note. The note specifies a lump sum payment of $300,000 ten years in the future and annual payments (beginning today) of $2,000 at the beginning of each year for ten years. Assume an annual interest rate of 10 percent.
REQUIRED:
a. Would Joy Don be wise to accept $110,000 now instead of the note? Why or any not?
b. AT what interest rate would Joy Don the wise to accept the $110,000 instead of the note?
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a To determine whether the offer of 110000 today is a good deal the future cash flows must be conver...View the full answer
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