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The Perth Mint (the government corporation that prints money andcoin) had just produced a one kilogram gold coin imbedded with arare-red-argyle diamond. The mint values the coin at $1,000,000. Aone kilogram of gold has a market value of approximately $50,000while the news media values the rare diamond at $950,000.1. If the gold and the diamond both increase in value at 2% perannum, how much will the coin be worth in ten (10) years' time?11. Assume gold increases in value at the risk free rateestimated to be 1.7% and diamonds have an average expected annualrate of price increase of 4.5%.How much will the cold coin be worth in ten years' time?111. Would you consider the gold coin a good investment? Why orwhy not?
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