You are thinking about investing $5,022 in your friend's landscaping business. Even though you know the investment is risky and you can't be sure, you expect your investment to be worth $5,615 next year. You notice that the rate for one-year Treasury bills is 1%. However, you feel that other investments of equal risk to your friend's landscape business offer an expected return of 10% for the year. What should you do?
You are thinking about investing $5,022 in your friend's landscaping business. Even though you know the investment is risky and you can't be sure, you expect your investment to be worth $5,615 next year. You notice that the rate for one-year Treasury bills is 1%. However, you feel that other investments of equal risk to your friend's landscape business offer an expected return of 10% for the year. What should you do?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 22P
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