A local bank is running the following advertisement in the newspaper: "For just $ 1,000...
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Accounting
A local bank is running the following advertisement in the newspaper: "For just $ 1,000 we will pay you $100 forever!" The fine print in the ad says that for a $1,000
deposit, the bank will pay $ 100 every year in perpetuity, starting one year after the deposit is made. What interest rate is the bank advertising (what is the rate of return of this investment)?
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