Question 12 5 pts Jim sold a car and accepted a note promising cash flows of...

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Answer 1

Answer #1

Future cash flows

Year	Cash flow
1	1000
2	2000
3	2000
4	2000

So, Present value of cash flows = 1000/1.085 + 2000/1.085^2 + 2000/1.085^3 + 2000/1.085^4 = $5629.53

So, effective price Jim received for the car is $5629.53

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Answer 2

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