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An investment costs $1500, and pays $100 in 1 year, $300 in 2 years, $300 in 3 years, and can be sold for $2000 in
An investment costs $1500, and pays $100 in 1 year, $300 in 2 years, $300 in 3 years, and can be sold for $2000 in 4 years. If an investor requires a return of 18%, should the investor purchase this investment?
a. Yes. The expected return is greater than the required return
b. Yes. The required return is greater than the expected return
c. No. The expected return is greater than the required return
Please show the calculation and explain why. Thank you.
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