Question
Your broker calls you and tells you that he has this great investment opportunity. If you invest $100 today, you will receive $40 in one
Your broker calls you and tells you that he has this great investment opportunity. If you invest $100 today, you will receive $40 in one year and $75 in two years. If you require a 15% return on investments of this risk, should you take the investment?
A. Yes, because the investment return exceeds your required return.
B. Yes, because the cash flows received exceed the initial investment.
C. No, because your required return exceeds the investment return.
D. No, because the cash flows do not exceed the initial investment.
E. There is insufficient information to answer the question.
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