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You have invested in a business that proudly reports that it is profitable. Your investment of $5,200 has produced a profit of $304. The managers
You have invested in a business that proudly reports that it is profitable. Your investment of $5,200 has produced a profit of $304. The managers think that if you leave your $5,200 invested with them, they should be able to generate $304 per year in profits for you in perpetuity. Evaluating other investment opportunities, you note that other long-term investments of similar risk offer an expected return of 7.5%. Should you remain invested in this firm?
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