Suppose You Are Offered Two Investment Alternatives

question 61

Essay

Suppose you are offered two investment alternatives. If you choose Alternative 1, you will have to make an immediate outlay of $26 000. In return, you will receive $1500 at the end of every three months for the next ten years. If you choose Alternative 2, you will have to make an outlay of $14 000 now and $8000 in two years. In return, you will receive $60 000 ten years from now. Interest is 8.22% compounded semi-annually. Compute the net present value for each alternative and determine which investment should be accepted or rejected according to the net present value criterion.

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Definitions:

Association Areas

Regions of the cerebral cortex that are not involved in primary motor or sensory functions; instead, they are involved in integrating information from different modalities, contributing to higher mental functions such as thinking and learning.

Association Areas

Regions of the brain that integrate simpler functions to perform more complex functions.

Somatosensory Cortex

A part of the brain that processes sensory information from various parts of the body, including touch, temperature, and pain.

Plasticity

The brain's ability to change and adapt as a result of experience.