If we use a 4 rate the value of the 30 payments is 1295, Ask an Expert

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If we use a 4% rate, the value of the 30 payments is $129.5 million, so we should take the 30 payments. If we use a 5% rate to discount the cash flows, the value of the 30 payments is $116.2 million, so we should take the one-time payment. The rate is given, but in real life, how do we determine what rate to use?

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Financial Management, Finance

Category:- Financial Management
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