Damon Is Contemplating Taking a Deal with His Uncle,who Is

question 24

Multiple Choice

Damon is contemplating taking a deal with his uncle,who is a very successful entrepreneur.He must pay his uncle $50,000 this year and an additional $50,000 at the end of both the fifth and tenth year.This would allow him to receive a perpetual annual cashflow of $12,000.What is the NPV of this offer if the interest rate is 10%?

• A)$120,000
• B)$30,000
• C)$220,323.23
• D)$69,676.77
• E)$19,676.77

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Definitions:

Vertical

Oriented upward, perpendicular to the horizon or a horizontal plane.

Rotary

Refers to something revolving around a center or axis, such as a rotary engine or a rotary dial.

Ear Ossicles

The three small bones in the middle ear known as the malleus, incus, and stapes, which transmit sound vibrations from the eardrum to the inner ear.

Visual Accessory

Visual accessory refers to items or devices that enhance or support vision, such as glasses, contact lenses, or magnifying tools.