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An investment has a cost of $2500. The investment will have a payout of X...

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Finance

An investment has a cost of $2500. The investment will have a payout of X at the end of the first

year. This initial payout X will grow at the rate of 12% per year for the next 2 years, then by 9%

per year for the next 2 years, and then at the rate of 6% per year for the following 2 years. You

believe the riskiness of this investment is 8%.

a.

Calculate the smallest X that would entice you to invest.

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