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You have $5,000 to invest. You have two choices of how to invest. Choice A would have you invest at 5% per year for two
You have $5,000 to invest. You have two choices of how to invest. Choice A would have you invest at 5% per year for two years. Choice B would have you invest at 4.75% for the first year and then re-invest the proceeds for another year. What rate of return would you need to earn on the second year of Choice B to make you expect to earn the same return as for Choice A?
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