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In Keynesian theory of investment, suppose an asset costs $1000 and it is expected to yield $600 at the end of year 1 and $600 at the end of the second year (and zero thereafter), then r* (rate of return associated with marginal project) will be
a) 10%
b) 11%
c) 12%
d) 13%
What is the formula of rate of return?
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