Magazine offers a lifetime subscription

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A popular magazine offers a lifetime subscription for $200. Such a subscription may be given as a gift to an infant at birth (the parents can read it in those early years), or taken out by an individual for himself. Normally, the magazine costs $12.90 per year. Knowledgeable people say it probably will continue indefinitely at this $12.90 rate. What rate of return would be obtained if a life subscription were purchased for an infant, rather than paying $12.90 per year beginning immediately? You may make any reasonable assumptions, but the compound interest factors must be correctly used.

Reference no: EM131806335

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