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A local bank is running the following advertisement in the newspaper: For just 2000 we will pay you 200 forever! The fine print in the
A local bank is running the following advertisement in the newspaper: "For just 2000 we will pay you 200 forever!" The fine print in the ad says that for a $2,000 deposit, the bank will pay $200 every year in perpetuity, starting one year after the deposit is made. What interest rate is the bank advertising (what is the rate of return of this investment?
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