A stock had returns of 85 -18 15 17 and 12 percent over the


1. Your brother offers you $75,000 today for a claim to your future inheritance of $500,000, twenty years from today. If the discount rate is 10%, should you accept his offer?

2. You invested $1,000 today at 4% compounded annually. How much interest was earned in year 5?

3. A stock had returns of 8.5, -18, 15, 17, and 12 percent over the past five years, respectively. What was the geometric average return?

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Financial Management: A stock had returns of 85 -18 15 17 and 12 percent over the
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