Suppose someone offered to sell you a note (an investment) that calls for $1,000 payment two years from today. The person offers to sell the note for $880. You have $880 in a bank time deposit (savings instrument) that pays a 6.766492 percent simple rate with daily compounding, which is a 7 percent effective annual interest rate; and you plan to leave this money in the bank unless you buy the note. The note is not risky — that is, you are sure it will be paid on schedule. a. Should you buy the note? Check the decision in three ways: i. by comparing your future value if you buy the note versus leaving your money by comparing the pv of the note with your current bank investments and by comparaing the r earon the note with your current bank
Suppose someone offered to sell you a note (an investment) that calls for $1,000 payment two years from today. The person offers to sell the note for $880. You have $880 in a bank time deposit (savings instrument) that pays a 6.766492 percent simple rate with daily compounding, which is a 7 percent effective annual interest rate; and you plan to leave this money in the bank unless you buy the note. The note is not risky — that is, you are sure it will be paid on schedule. a. Should you buy the note? Check the decision in three ways: i. by comparing your
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