A local bank is running the following advertisement in the newspaper: "For just $5,000 we...
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Finance
A local bank is running the following advertisement in the newspaper: "For just
$5,000
we will pay you
$400
forever!" The fine print in the ad says that for a
$5,000
deposit, the bank will pay
$400
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)?
The interest rate the bank is advertising is
%.
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