Assume an investor with $5000 to invest is considering several alternatives,each covering ten years.Which of the following alternatives would you expect the investor to choose accounting for the time-value-of-money in your calculations?
A) Investor receives $500 at the end of year 1,plus the original $5000 at the end of year 10.
B) Investor receives $50 at the end of each year for 10 years,plus the original $5000 at the end of 10 years.
C) Investor receives $500 at the end of the 10th year,plus the original $5000.
D) Investor receives $5000 at the end of year 10.
Correct Answer:
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