Question

Elliott Dumack must earn a minimum rate of return of 11% to be adequately compensated for the risk of the following investment.
Initial Investment $14,000
End of Year Income ($)
1 .......... 6,000
2 .......... 3,000
3 .......... 5,000
4 .......... 2,000
5 .......... 1,000
a. Use present value techniques to estimate the yield on this investment.
b. On the basis of your finding in part a, should Elliott make the proposed investment? Explain.


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  • CreatedApril 28, 2015
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