4. Kazoua is selling her business. The buyer offers her a choice: She can receive a...
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4. Kazoua is selling her business. The buyer offers her a choice: She can receive a payment of $5000 each month for 6 years, or she can receive a single cash payment of $250 000 immediately. Assume that money can be invested at 7.2% per year compounded monthly (the same rate for lump sum as for an annuity). Which payment should Kazoua accept? Explain your reasoning. [4 marks] 4. Kazoua is selling her business. The buyer offers her a choice: She can receive a payment of $5000 each month for 6 years, or she can receive a single cash payment of $250 000 immediately. Assume that money can be invested at 7.2% per year compounded monthly (the same rate for lump sum as for an annuity). Which payment should Kazoua accept? Explain your reasoning. [4 marks]
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