Answer:
This question has a missing information. I have found the complete version and pasted it down below;
"Your neighbor offers you an investment opportunity, which will pay a single lump sum of S2,000 five years from today. The investment requires a single payment of <em>$1,500 today</em>. The return on the investment is % A. 4.195 B. 4.729 C. 5.361 D. 5.922 E. 6.961 "
Explanation:
This question requires you to find that discount rate given a single future cashflow. $2,000 is expected 5 years from today, hence the future value. $1,500 payment today is the dollar value today, hence the Present value.
Using a financial calculator, you will key in the following inputs;
Total duration; N = 5
Present value; PV = -1,500 (it's a cash outflow hence negative)
Recurring payment; PMT = 0
Future value; FV = 2,000
then find the rate by keying in CPT I/Y = 5.922%
Therefore, the return on the investment is 5.92%
