Answered: An investment of $2,000 today, will pay…

An investment of $2,000 today, will pay 10 annual payments of $300 each. Compute the exact (up to two decimals) rate of return on this investment. (Hint: between 8 and 9%)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 28P

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Question

An investment of $2,000 today, will pay 10 annual payments of $300 each. Compute the exact (up to two decimals) rate of return on this investment. (Hint: between 8 and 9%)

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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