Chapter 6, Question 49: Comparing Cash Flow StreamsYou have your choice of two investment accounts. Investment A is a13-year annuity that features end-of-month $1,250 payments and has aninterest rate of 7.5 percent compounded monthly. Investment B is a 7percent continuously compounded lump sum investment, also good for13 years. How much money would you need to invest in Investment Btoday for it to be worth as much as Investment A 13 years from now?17

all it means is function 3

required rate of return = 0.166 = 16.6%

step-by-step explanation:

under the capital asset pricing model (capm), the required or expected rate of return for a particular security or asset is given using the formula:

required rate of return = risk-free rate + beta*(market risk premium)

we are given that;

risk-free rate = 4% = 0.04

beta = 1.4

market risk premium = 9% = 0.09

we simply plug these values into the above formula;

required rate of return = 0.04 + 1.4*(0.09)

required rate of return = 0.04 + 0.126

required rate of return = 0.166 = 16.6%

they charge the same amount at 20 minutes.

step-by-step explanation: