There Are Two Options to Buy a Plot of Land

question 48

Essay

There are two options to buy a plot of land for construction: (i)upfront payment of $250 000, or (ii)four equal payments of $50 000 in years 1-4 and the fifth payment of $150 000 in year 5. What is the implied IRR of choosing the second option over the first?

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Definitions:

Reticular Formation

A network of neurons located in the brainstem that plays a key role in controlling arousal and alertness.

Higher Brain Regions

Parts of the brain associated with complex functions such as thinking, decision making, emotion, and consciousness, typically including the cerebral cortex and associated structures.

Coma

A deep state of prolonged unconsciousness in which a person cannot be awakened, fails to respond to stimuli, and does not have a normal sleep-wake cycle.

Aggressive

Behavior characterized by physical or verbal harm towards others, or by forcefulness to achieve one's goals.