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If the Interest Rate Is 5% and Will Remain 5

Question 10

Multiple Choice

If the interest rate is 5% and will remain 5% forever, how much would a rational investor be willing to pay for an asset that will pay him 6,300 dollars 1 year from now, 1,102 dollars 2 years from now, and nothing at any other time?


A) 7,000 dollars
B) 6,000 dollars
C) 140,000 dollars
D) 42,000 dollars
E) 8,000 dollars

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