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A well-known financial writer argues that he can earn 101 percent per year buying wine by the case. Specifically, he assumes that he will consume
A well-known financial writer argues that he can earn 101 percent per year buying wine by the case. Specifically, he assumes that he will consume one $14 bottle of fine Bordeaux per week for the next 12 weeks. He can either pay $14 per week or buy a case of 12 bottles today. If he buys the case, he receives a 7 percent discount and, by doing so, earns the 101 percent. Assume he buys the wine and consumes the first bottle today. Calculate the EAR.
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