What minimum rate of interest should investor shop for

Reference no: EM131900191

Problem

An investor is offered the opportunity of investing $100,000 in a six year project that will have a net income of $25,000 per year.

a. If the inflation rate is a constant 4% per year and his after inflation MARR is 10%, should he invest in this project?

b. If he is looking to invest his $100,000 where he can get an inflation adjusted rate (i.e., net, after inflation is taken into account) of 12%, what minimum rate of interest should he shop for?

Reference no: EM131900191

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