Assume you borrowed $100,000 at a fixed rate of 7 percent for 30 years to purchase a house. If the inflation rate is 3 percent, then your repayments to the lender have purchasing power than the dollars that s/he loaned to you. Assume you borrowed $100,000 at a fixed rate of 7 percent for 30 years to purchase a house. If the inflation rate is 3 percent, then your repayments to the lender have purchasing power than the dollars that s/he loaned to you.

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Read the following scenario and answer the question in 5-10 sentences. you are the owner of a small business that is a defendant in a lawsuit in federal court. you received bad news from your lawyer that the judge did not allow certain documents to be admitted as evidence in court and that the jury reached a $50,000 verdict in favor of the plaintiff. your lawyer tells you that it is within your legal right to hire him to file an appeal with the united states court of appeals. if the appellate court rules in your favor, you may be able to avoid paying part or all of the $50,000. evaluate your lawyer’s suggestion about appealing the decision.

Brandt enterprises is considering a new project that has a cost of $1,000,000, and the cfo set up the following simple decision tree to show its three most likely scenarios. the firm could arrange with its work force and suppliers to cease operations at the end of year 1 should it choose to do so, but to obtain this abandonment option, it would have to make a payment to those parties. how much is the option to abandon worth to the firm?