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Sam has promised to make four payments to Joe Each payment is in the amount

Sam has promised to make four payments to Joe. Each payment is in the amount of $1,000. What is the present value of these cash flows if the annual rate is 12%, and the payments begin?

a.

One year from today, and are paid annually?

b.

Six months from today, and are paid semi annually?

c.

Three months from today, and are paid quarterly?

Which method of payments do you think Sam and Joe would preferand why? (Show your work.)

May 02 2018 View more View Less

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