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The Table Below Shows the Payments at the End of Each

Question 15

Multiple Choice

The table below shows the payments at the end of each year from three different assets.  Year 1  Year 2  Year 3  Year 4  A $1000$1000$1000$X B $1000$0$2000$Y C $0$2000$1000$Z Interest Rate 5%6%5%7%\begin{array} { | l | c | c | c | c | } \hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \\\hline \text { A } & \$ 1000 & \$ 1000 & \$ 1000 & \$ X \\\hline \text { B } & \$ 1000 & \$ 0 & \$ 2000 & \$ Y \\\hline \text { C } & \$ 0 & \$ 2000 & \$ 1000 & \$ Z \\\hline \text { Interest Rate } & 5 \% & 6 \% & 5 \% & 7 \% \\\hline\end{array} TABLE 15- 1
-Refer to Table 15- 1.A,B,and C are possible investment opportunities that expire at the end of Year 4,each offering a stream of payments as indicated in the table.The interest rates in each year are also specified in the table.Assuming that X,Y,and Z are zero,which investment is the most valuable if an investor contemplates them at the beginning of Year 1?


A) A
B) B
C) C
D) They are equivalent.
E) It cannot be determined with the available data.

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