Do want to earn a high percentage return

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A rich, friendly, and probably slightly unbalanced benefactor offers you the opportunity to invest $1 million in two mutually exclusive ways.

The payoffs are:

a. $2 million after 1 year, a 100 percent return.
b. $300,000 a year forever.

Question 1: Neither investment is risky, and safe securities are yielding 7.5 percent. Which investment will you take? You can't take both, so the choices are mutually exclusive. Do you want to earn a high percentage return or do you want to be rich?

Reference no: EM132650861

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