Case Problem 4.1 Coates's Decision On January 1, 2017, Dave Coates, a 23-year-old mathematics teacher at Xavier High School, received a tax refund of$ 1,100. Because Dave didn't need this money for his current living expenses, he decided to make a long-term investment. After surveying a number of alternative investments costing no more than$ 1,100, Dave isolated two that seemed most suitable to his needs. Each of the investments cost$ 1,050 and was expected to provide income over a 10- year period. Investment A provided a relatively certain stream of income. Dave was a little less certain of the income provided by investment B. From his search for suitable alternatives, Dave found that the appropriate discount rate for a relatively certain investment was 4%. Because he felt a bit uncomfortable with an investment like B, he estimated that such an investment would have to provide a return at least 4% higher than investment A. Although Dave planned to reinvest funds returned from the investments in other vehicles providing similar returns, he wished to keep the extra$ 50 $ 1,100-$ 1,050) invested for the full 10 years in a savings account paying 3% interest compounded annually. As he makes his investment decision, Dave has asked for your help in answering the questions that follow the expected return data for these investments. Expected Returns End of Year A B 2017 50 0 2018 $ 50 $150 2019 50 $150