What rate of return would your uncle earn on his investment

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Question - A. Assume that you own an annuity that will pay you $15,000 per year for 12 years, with the first payment being made today. You need money today to start a new business, and your uncle offers to give you $120,000 for the annuity. If you sell it to your uncle, what rate of return would your uncle earn on his investment?

B. One problem with ratio analysis is that relationships can be manipulated. For example, we know that if our current ratio is less than 1.0, then using some of our cash to pay off some of our current liabilities would cause the current ratio to increase and thus make the firm look stronger. Do you agree? Explain why or why not?

C. "It is the investors who determine the cost of capital, and not the corporations that issue financial securities to raise capital." Evaluate this statement.

Reference no: EM133028191

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