Lucid was considering purchasing a small business. If it invests the amount of $500,000 for the purchase, the expected annual gross return of investing is $25,000. Assuming that the business does not change in value and that the annual interest rate remains constant, calculate the annual cost when the interest rate is 12% and when it is 3%. b. (t) Determine if the investment is good at each value of the interest rate. a.

Essentials Of Investments
11th Edition
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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VI.
Lucid was considering purchasing a small business. If it invests the amount of
$500,000 for the purchase, the expected annual gross return of investing is $25,000.
Assuming that the business does not change in value and that the annual
interest rate remains constant, calculate the annual cost when the interest rate is
12% and when it is 3%.
b. (t) Determine if the investment is good at each value of the interest rate.
a.
Transcribed Image Text:VI. Lucid was considering purchasing a small business. If it invests the amount of $500,000 for the purchase, the expected annual gross return of investing is $25,000. Assuming that the business does not change in value and that the annual interest rate remains constant, calculate the annual cost when the interest rate is 12% and when it is 3%. b. (t) Determine if the investment is good at each value of the interest rate. a.
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