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    Time Value of Money-Present Value of two alternatives

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    Suppose you have the option to receive $1000 every year starting next year, lasting for 20 years or to receive $2000 every year starting next year for the next 5 years with an interest rate of 5 % wich one is better. (show calculations as a fixed payment loan).

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    https://brainmass.com/economics/the-time-value-of-money/time-value-money-present-value-two-alternatives-13976

    Solution Preview

    To compare the two we will have to calculate the present value of the two cash flow

    Cash flow 1: $1000 every year for the next 20 years
    Cash flow 2: $2000 every year for the next 5 years

    Cash flow 1: $1000 every year for the next 20 years
    Payment A Annual
    No of ...

    Solution Summary

    The solution calculates Present Value of two alternatives.

    $2.19

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