Question
(Solving for i ) You are considering investing in a security that will pay you $2,000 in 34 years. a. If the appropriate discount rate
(Solving for i) You are considering investing in a security that will pay you $2,000 in 34 years.
a. If the appropriate discount rate is 10 percent, what is the present value of this investment?
b. Assume these investments sell for $495 in return for which you receive $2,000 in 34 years. What is the rate of return investors earn on this investment if they buy it for $495?
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Part 1
a. If the appropriate discount rate is 10 percent, the present value of this investment is $78.2978.29. (Round to the nearest cent.)
Part 2
b. The rate of return investors can earn on this investment if they buy it for $495 is (x)%. (Round to two decimal places.)
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