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2. Effortless Investments has proposed two investments. The first investment pays the following cash flows in years 1 to 6: Yr 1: $1,000, Yr 2:

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2. Effortless Investments has proposed two investments. The first investment pays the following cash flows in years 1 to 6: Yr 1: $1,000, Yr 2: $3,000, Yr 3: $5,000, Yr 4: $7,000, Yr 5: $9,000 and Yr 6: $11,000. The second investment is a perpetuity which pays $2,500 a year with the 1st cash flow occurring at the end of year 3. Both investments cost $30,000. Your client requires a rate of return of 6% p.a. which can be applied to both investments. Identify whether these investments are good (or not). (14 marks)

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