What is the effective rate of return on your investment

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Reference no: EM131853602

1. Suppose you pay $100,000 for an investment that will pay you $4,000 every six months. You can reinvest the 4,000 at an APR of 5%. Assuming in 10 years you will get back the $100,000, what is the EAR (effective rate of return) on your investment?

2. An investment offers a total return of 14 percent over the coming year. Janice Yellen thinks the total real return on this investment will be only 8 percent.

Reference no: EM131853602

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