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True fact: Ancient Roman contractors who built roads were paid half when the road was completed, and half 40 years after the road had been completed if the road was still in good working order. Assume

a) True fact: Ancient Roman contractors who built roads were paid half when the road was completed, and half 40 years after the road had been completed if the road was still in good working order. Assume the annual yield is 1.5%. A contractor receives a contract to build a small road and will be paid a total 10,000 denarii. It will take 3 years to complete the road, so the contractor will be paid 5,000 denarii in 3 years and another 5,000 denarii in 43 years. What (to the Ancient Roman contractor) is the present value of this contract? Round your answer to the nearest denarii.

 b) A business is purchased for $400,000. It makes an annual profit of $40,000. Nine years later, it is sold for $8,000,000. Calculate the total rate of return for this investment. (Hint: there are two components of this, which will need to be added together.) Round, if necessary, to the nearest 0.1%.

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