Question 5.7: Deceptive Advertising? Businesses sometimes advertise that y...

Fundamentals of Corporate Finance Standard Edition

Deceptive Advertising?

Businesses sometimes advertise that you should “Come try our product. If you do, we’ll give you $100 just for coming by!” If you read the fine print, what you find out is that they will give you a savings certificate that will pay you $100 in 25 years or so. If the going interest rate on such certificates is 10 percent per year, how much are they really giving you today?

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