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You are offered an investment that will pay $300 in year 1, $400 the next year, $800 the following year, and

You are offered an investment that will pay

• $300 in year 1,

• $400 the next year,

• $800 the following year, and

• $900 at the end of the 4th year.

You can earn either 12% or 10% on similar investments.

Choose which is the most you should pay for this one?

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