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Sara Holliday must earn a return of 13% on an investment that requires an initial outlay of S2.200 and promises to return S7,000 in 10
Sara Holliday must earn a return of 13% on an investment that requires an initial outlay of S2.200 and promises to return S7,000 in 10 years a. Use present-value techniques to estimate the yield on this investment. b. On the basis of your finding in part a, should Sara make the proposed investment? Explain. a. The yield on this investment is %. (Enter as a percentage and round to two decimal places) b. On the basis of your finding in part a, should Sara make the proposed investment? (Select the best answer below.) 0 A. Yes, because a minimum required return of 13% is an arbitrary choice for an investment of this risk level. O B. Yes, because this investment yields more than the minimum required return of 13%. ( C. No, because a minimum required return of 13% does not compensate for an investment that lasts longer than one year 0 D. No, because this investment yields less than the minimum required return of 13%
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