Your brother has asked you to help him with choosing an investment. He has $4,500 to invest today for a period of two years. You identify a bank CD that pays an interest rate of 0.0500 annually with the interest being paid quarterly. What will be the value of the investment in two years?
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Question 8 (1 point)
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You are evaluating a growing perpetuity product from a large financial services firm. The product promises an initial payment of $20,000 at the end of this year and subsequent payments that will thereafter grow at a rate of 0.02 annually. If you use a discount rate of 0.09 for investment products, what is the present value of this growing perpetuity?
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