V x .05 = 5,000This says that V is some amount of money such that 5% (.05) of it is 5,000. In other words the value of a stream of revenue equal to $5,000. So we solve this simple problem
V x .05 = 5,000 or V = 5,000/.05 = 100,000
So the value of the bar to you is roughly $100,000 if the interest rate is 15%. Someone with less education might be willing to pay far more for the bar? Can you explain why this is perfectly rational for them?
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