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Hello Sir John, Please help on this question on IA:
An investor has a cost of capital of 10%. He is due to receive a 5 year annuity starting in 3 year’s times of $7,000 Per annum. What amount lump sum would you need to offer today to make him indifferent between the annuity and your offer?
A. $26,537
B. $19,936
C. $16,667
D. $21,924
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