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$50,000 is invested in such a way as to repay the investor an interest payment of $1,000 at the end of each quarter for 10 years. At the end of the 10 years, the $50,000 is returned in a lump sum. As soon as his interest payment is received, it is deposited in a savings account bearing interest at 6% nominal annual rate compounded quarterly. It is desired to find the nominal rate of return, compounded semi annually, on the $50,000 investment over the 10 year period. Which of the following expresses the rate of return?

A. 2.085/10, B. 2.085/20, C. ((2.085)^(1/10))-1, D ((2.085)^(1/20))-1, E. 2((2.085)^(1/20))-1

 

Please, no excel spreadsheets.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91539077

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