The television commercial pitchman tells you he can double your money with a risk-free investment in just 10 years
If this is true, what interest rate must this risk-free investment earn on an annual basis? Solve this question using the Rule of 72 and then in a more exact fashion using a formula, your calculator, or computer. In today's rate environment, is the interest rate that you solved for a realistic annual rate of return for a risk-free investment?
What will be an ideal response?
Answer: Your 10-year risk-free investment would have to earn about 7.20% per year via the Rule of
72, where the rate is determined by dividing 72 by the time period or years = 7.20%. A more exact result is found via the formula r = (FV/PV)1/n - 1 = ($2/$1)1/10 - 1 = 7.18%. As this problem is written, 10-year treasury bonds are yielding close to 2.25%, so an annual rate of 7.20% on a risk-free investment is not very likely. However, the correct answer to this portion of the question will depend on current economic conditions.
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Measures of the extent of progress based on efforts devoted to the contract (costs incurred, labor hours worked, etc.).
(a) contract liability (b) upfront fees (c) franchisee (d) input measures
To increase the probability of selecting a good partner for forming a strategic alliance, a firm should:
a) avoid gathering data about potential partners from third parties. b) minimize managerial interactions before finalizing a deal with the partner. c) collect publicly-available information on potential allies. d) partner with firms that have vertical organizational structures and controls.