Assume an individual makes a lump sum investment at the beginning of year one of $38,420, the present value of which is $38,420. The investor’s discount rate, for an alternative safe investment, is 11.40 percent after tax. The expected return on this investment (received at each year-end) is as follows.

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Assume an individual makes a lump sum investment at the beginning of year one of $38,420, the present value of which is $38,420. The investor’s discount rate, for an alternative safe investment, is 11.40 percent after tax. The expected return on this investment (received at each year-end) is as follows.

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