What is the EAR when an investment grows from $110 to $120 after 2 years? Please...

Question

Question

What is the EAR when an investment grows from $110 to $120 after 2 years?

Please show formula used and work

business finance

Answer 1

Answer #1

This question requires application of basic time value of money function, according to which EV PV (1 where FV is Future Valu

$120 = $110 * (1 + r)²

1.0909 = (1 + r)²

1 + r = 1.0445

r = 0.0445 = 4.45%

Answer 2

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