An Investment Today of $25,000 Promises to Return $10,000 Annually

question 60

Multiple Choice

An investment today of $25,000 promises to return $10,000 annually for the next three years.What is the approximate real rate of return on this investment if inflation averages 6 percent annually during the period?

• A)3.5 percent
• B)9.7 percent
• C)14.0 percent
• D)20.0 percent Solving with financial calculator, the IRR = 9.701%.

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Definitions:

Hepatitis

Inflammation of the liver, often caused by viral infections, toxins, medications, or autoimmune disease.

Hepatoma

A malignant tumor of the liver, also known as hepatocellular carcinoma, which is common in individuals with chronic liver diseases.

Nephritis

Inflammation of the kidneys, which can alter their function and is classified by the location such as glomerulonephritis or interstitial nephritis.

Nephroma

A rare, typically benign tumor of the kidney tissue, which may or may not present symptoms.