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Jing Associates LLC a large law firm in Denver is building a new office complex To pay for the construction Jing Associates is selling a security that will pay the investor the lump sum of

Jing Associates, LLC, a large law firm in Denver, is building a new office complex. To pay for the construction, Jing Associates is selling a security that will pay the investor the lump sum of $6,750 in five years. the current market price of the security is $5,896. Assuming that you can earn an annual return of 3.75% on your next most attractive investment, how much is the security worth to you today? $7,019 $5,615 $5,334 From strictly a financial perspective, should you invest in the Jing security? No Yes Why or why not? Because the cost (market value) of the security is greater than the discounted value of the security's future cash flows. Because the discounted value of the security's future cash flows is greater than the cost of the security.

 

Apr 02 2020 View more View Less

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