You received two offers on a boat you were selling at a recreational dealer is offering $9500 cash and your buddy Josh is offering you five semi annual payments of $2000. Starting two years from now payments are ordinary annuity a)whose offer has the greatest economic value and discount rate of 4.5 semi annual B what is the economic advantage in the current dollars of the preferred alternative?
Added by Ashley L.
Step 1
Since the payments are made semi-annually, we need to adjust the discount rate accordingly. The semi-annual discount rate is 4.5% / 2 = 2.25% or 0.0225. Show more…
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