An investment in a real e.state venture will provide returns at the end of the next four \"ears as fol lows:

year I. S5,500; year 2, S7.500: year 3, S9.500; and year 4. $12.500. An im'es~or wants to earn a 13 percent aJIIJl(al return on her investment. How mu(.:h should she pay for the investment?

Assuming that the investor wanted (0 earn an annual rate of 13 percent compounded II/ollfh(y. how much would she pay for this investment? Why are these twO amounts different?

AppendixLO1