Annually on alternative investment of equivalent risk

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Reference no: EM131981237

You can purchase a bond that has 8 years to maturity. In exchange for your purchase today, it will pay you $850 at the end of each of the next eight years with the first payment coming one year from now. It can be purchased for $5,000. Should you buy the bond given that you can earn 9% annually on an alternative investment of equivalent risk?

Reference no: EM131981237

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