(a) Suppose for an initial investment of 1, you receive the nonnegative cash payments x1, ....

 

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(a) Suppose for an initial investment of 1, you receive the nonnegative cash payments x1, . .. , Xn, with x; being received at the end of i periods. To determine if the rate of return of this investment is greater than 10 percent per period, is it necessary to first solve the equation 1 = D-1 x;(1 +r)¯ for the rate of return r? (b) For an initial investment of 100, an investor is to receive the amounts 8, 16, 110 at the end of the following three periods. Is the rate of return above 11 percent? %3D (a) Suppose for an initial investment of 1, you receive the nonnegative cash payments x1, . .. , Xn, with x; being received at the end of i periods. To determine if the rate of return of this investment is greater than 10 percent per period, is it necessary to first solve the equation 1 = D-1 x;(1 +r)¯ for the rate of return r? (b) For an initial investment of 100, an investor is to receive the amounts 8, 16, 110 at the end of the following three periods. Is the rate of return above 11 percent? %3D