All subsequent cash flows are expected to grow annually

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1. You can buy a car advertised for $15,000 on the following terms: (a) pay $15,000 and receive a $1,500 rebate from the manufacturer or (b) pay $250 a month for 5 years, for total payments of $15,000, implying 0% financing. Which is the better deal if the interest rate is 1% per month?

2. Anna owns a(n) vending machine that is worth 50,178 dollars and is expected to make annual cash flows forever. The cost of capital for the vending machine is 19.98 percent. The next annual cash flow is expected in 1 year and is expected to be 7,030 dollars. All subsequent cash flows are expected to grow annually at a constant growth rate. What is the cash flow produced by the laser tag center in 2 years expected to be?

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Reference no: EM131963125

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