Your Neighbor Owns a Perpetuity of $100 Per Year That

question 90

Multiple Choice

Your neighbor owns a perpetuity of $100 per year that has a discount rate of 6% per year.He offers to sell to you all but the next 20 cash flows (the first to be received one year from today) for $500.In other words,he keeps the first 20 cash flows of his perpetuity and you get all of the rest.Is this a good price for you if the appropriate discount rate is 6%?

• A)No,because the entire perpetuity is worth only $1,666.67 and your neighbor is taking the best cash flows worth more than $1,200 in present value terms
• B)Yes,because the present value of the remaining cash flows is $519.68 and you are buying them for only $500.
• C)No,because the cash flows you receive are only worth $482.16 and that is less than the $500 your neighbor is asking for the cash flows.
• D)This question cannot be answered.

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Identify the reasons behind the shift from home to hospital births and the benefits of hospital births.

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Definitions:

Liability

A legal obligation or responsibility that can be enforced by law, often involving the settlement of debts or damages.

Accepted

Having an offer or proposal agreed upon, typically marking the formation of a contract or agreement.

Federal Acts

Laws enacted by the federal government of a country, applying nationwide and superseding local or state laws in areas of federal jurisdiction.

Consumer Protection

Laws and strategies designed to ensure the rights of consumers, as well as fair trade, competition, and accurate information in the marketplace.