Your sister 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 $9,000 at the end of the 5th year. What is the expected rate of return on this investment? Select the correct answer. O a. 8.12% O b. 2.12% O c. 4.52% O d. 3.32% O e. 5.72%

Your sister 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 $9,000 at the end of the 5th year. What is the expected rate of return on this investment? Select the correct answer. O a. 8.12% O b. 2.12% O c. 4.52% O d. 3.32% O e. 5.72%

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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You have $100,000 in your savings account and plan to retire with $750,000 in the bank in 40 years. You are hoping to achieve areasonable rate of return on your investments and want to know the target rate you should be looking for. Select one: a. 4.12 b. 3.14 c. 5.16 d. 6.13
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