MC algo 7-4 The Fisher Effect A bond that pays interest annually yields a rate of return of 5.25 percent. The inflation rate for the same period is 2 percent. What is the real rate of return on this bond? Multiple Choice 3.19% 2.63% 1.03% 2.00% 7.25% MC algo 9-10 Calculating IRR Blinding Light Co. has a project available with the following cash flows: Year 1 2 3 4 5 Cash Flow -$34,910 8,000 9,610 13,630 15,650 10,400 What is the project's IRR? Multiple Choice 18.37% 19.59% 15.87% Pror 18 of 23 Next MC algo 6-49 Calculating Perpetuity Present Values Your grandparents would like to establish a trust fund that will pay you and your heirs $125,000 per year forever with the first payment one year from today. If the trust fund earns an annual return of 2.4 percent, how much must your grandparents deposit today? Multiple Choice $4,340,277.78 $4,807,692.31 $5,208,333.33 $4,557,291.67 $5,952,380.95