PW:Pay an Extra Dollar

Suppose you have a MARR of 10% and there is an asset that you can buy for $10 that pays $20 in time period seven. Would you pay an extra dollar now to get the $20 in time period six rather than seven?

Question options:

  • Yes, since the present value of the faster payoff and higher cost now is greater than the present value of the original asset.
  • Yes, since the present value of the faster payoff and higher cost now is still greater than zero.
  • No, since the net cash flow of the faster payoff is $9 rather than $10.
  • No, since the present value of the faster payoff and higher cost now is less than the present value of the original asset.
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