Assume that an investment generates the following income stream and
Assume that an investment generates the following income stream and can be purchased at the beginning of 2014 for $1,000 and sold at the end of 2020 for $1,200. Estimate the yield for this investment. If a minimum return of 9% is required, would you recommend this investment? Explain.
End of Income
Year Stream ($)
2014 .......... 140
2015 .......... 120
2016 .......... 100
2017 .......... 80
2018 .......... 60
2019 .......... 40
2020 .......... 20
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