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Liono4ka [1.6K]
3 years ago
9

Given a real rate of interest of 3.2%, an expected inflation premium of 5.1%, and risk premiums for investments A and B of 7.4%

and 8.9% respectively, find the following: a. The risk-free rate of return, rf b. The required returns for investments A and B
Business
1 answer:
blagie [28]3 years ago
6 0

Answer:

a. Risk-free rate of return:

= Real rate of return + Inflation premium

= 3.2% + 5.1%

= 8.3%

b. Required return for investment A:

= Risk free rate of return + Risk premium

= 8.3% + 7.4%

= 15.7%

Required return for investment B

= 8.3% + 8.9%

= 17.2%

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Answer:

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"do we build a house forever? do we make a home forever? do brothers divide an inheritance forever? do disputes prevail in the l
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You are to receive an annuity of $1,000 per year for 10 years. You will receive the first payment two years from today. At a dis
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Answer:

present value of annuity is $61445.66

Explanation:

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to find out

present value of annuity

solution

we will apply here present value formula that is

present value = P ( 1 - ( 1 + r )^-t ) / r  ..........................1

put here all value for r, t  and P in equation 1

present value = P ( 1 - ( 1 + r )^-t ) / r

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