A local bank is running the following advertisement in the newspaper: For just $3000 we will pay

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A local bank is running the following advertisement in the newspaper: “For just $3000 we will pay you $180 forever!” The fine print in the ad says that for a $3000 deposit, the bank will pay

$180 every year in perpetuity, starting one year after the deposit is made. What interest rate is the bank advertising (what is the IRR of this investment)?

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Corporate Finance The Core

ISBN: 9781292431611

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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