Your father paid $10,000 (CF at t= 0) for an investment that promises to pay $750 at the end of each of the next 5 years, then an additional lump sum payment of $10,000 at the end of the 5th year. What is the expected rate of return on this investment? a. b. C. d. 6.77% 7.13% 7.50% 7.88% 8.27%

Your father paid $10,000 (CF at t= 0) for an investment that promises to pay $750 at the end of each of the next 5 years, then an additional lump sum payment of $10,000 at the end of the 5th year. What is the expected rate of return on this investment? a. b. C. d. 6.77% 7.13% 7.50% 7.88% 8.27%

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

Section: Chapter Questions

Problem 1PS

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Question

Your father paid $10,000 (CF at t= 0) for an investment that promises to pay $750 at the
end of each of the next 5 years, then an additional lump sum payment of $10,000 at the end
of the 5th year. What is the expected rate of return on this investment
a.
b.
C.
d.
e.
6.77%
7.13%
7.50%
7.88%
8.27%

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