III. Consider the current production capacity level.
III and IV only
1. Can project both net income and net cash flows.
I, III, and IV only
II and III only
II, III, and IV only
I and II only
You are comparing two investment options that each pay 6 percent interest compounded annually. Both options will provide you with $ 12000 of income. Option A pays $ 2,000 the first year followed by two annual payments of $ 5,000 each. Option B pays three annual payments of $ 4,000 each. Which one of the following statements is correct given these two investment options? Assume a positive discount rate.
Option B is a perpetuity.
Option B has a higher present value at time zero.
Both options are of equal value since they both provide $ 12,000 of income.
Option A has the higher future value at the end of year three.
Option A is an annuity.
The condition stating that the interest rate differential between two countries is equal to the percentage difference between the forward exchange rate and the spot exchange rate is called: