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    You are considering the purchase of an investment. What is the MOST you would be willing to pay for this investment?

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    You are considering the purchase of an investment that would pay you $5,000 per year for Years 1 5, $3,000 per year for Years 6 8, and $2,000 per year for Years 9 and 10. If you require a 14 percent rate of return, and the cash flows occur at the end of each year, then what is the MOST you would be willing to pay for this investment?

    a. $15,819.27
    b. $21,937.26
    c. $32,415.85
    d. $38,000.00
    e. $52,815.71

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    https://brainmass.com/business/finance/243962

    Solution Preview

    What we are willing to pay is the present value of the cash flows ...

    Solution Summary

    The solution explains how to determine the maximum price to be paid for an investment using the present value calculation.

    $2.49

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