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John borrows $100,000 from the bank at 8% interest and uses the capital to start an internet marketing company. Based on his forecast of future

John borrows $100,000 from the bank at 8% interest and uses the capital to start an internet marketing company. Based on his forecast of future profits over five years, he calculates his internal rate of return at 10%. Inflation is also running at 2% annually. Is this a good investment?

Yes, John is earning a higher Internal Rate of Return that the loan.

Yes, John's Internal Rate of Return with Inflation is returning 12%, and his loan is 8%.

No, after inflation John is just breaking even and therefore not earning a profit.

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