Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. alysha has been offered two perpetuities: grow and

Alysha has been offered two perpetuities: Grow and Shrink. Grow promises her $200 in one...

60.1K

Verified Solution

Question

Finance

image
Alysha has been offered two perpetuities: Grow and Shrink. Grow promises her $200 in one year and an annual cash flow that will increase by 4 percent per year forever. Shrink, in contrast, promises her $1,500 in one year but the annual cash flow will decline by 2 percent forever. If her opportunity cost is 5 percent per year and both annuities cost $1,500, which annuity offers her the greater value? (Round "Shrink cost" to 2 decimal places, e.g. 125.12 and other answer to 0 decimal places, e.g. 12,512) Grow exceeds the cost by $ Shrink exceeds the cost by offers the greater value

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Question 6 (0.5 point) How many stages are used in describing the pathways of catabolism? • 1 •...

Biology
Q

A substance has a melting point of 20 degrees celsius and a heat of fusion of 3.4*10^...

Physics
Q

One strand of DNA has the sequence 5'-TCCG-3'. What is the sequence of thecomplementary strand?...

Biology
Q

The temperature in an industrial pasteurization tank is f(x) = x2 - 9x + 119...

Basic Math
Q

A5 A3 7 - 8 7. Consistency demands that a cost that is relevant in...

Accounting
Q

ucation.com%2525 at 4 Fall 2021 Saved Hubrey Home Inc. is considering a new three-year expansion...

Accounting
Q

example of accounting students attachment log book

Accounting
Q

Jillian Inc. produces leather handbags. The production budget for the next four months is: July...

Accounting
Q

You borrow $80,000 at 5.00% per year and will pay off the loan in equal...

Accounting
Q

Selected transactions of the Acme Marine Supply Company are listed below. Classify each transaction as...

Accounting
Q

How to Compare and contrast the differences between Medical billing and Dental billing?

Accounting
Q

Assume a $1,000 face value bond has a coupon rate of 8.9 percent paid semiannually...

Finance