Red Herring will receive $11,000 a year for the next 18 years as a result...
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Red Herring will receive $11,000 a year for the next 18 years as a result of his patent. At present, 9 percent is an appropriate discount rate. Would he be willing to sell his future rights now for $100,000, if the payments will be made at the beginning of each year? Why
a) Yes, the present value of the annuity is worth less than $100,000.
b) No, the present value of the annuity is worth more than $100,000.
c) No decision can be made due to insufficient information.
d) Indifferent, because the present value of the annuity is exactly equal to $100,000.
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