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    Annual Yield for an investment

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    Please explain how to calculate the annual yield for an investment. For example: Albert Einstein Nursing Home has $200,000 in surplus funds and wishes to invest in marketable securities. The transaction costs to buy and sell the securities are $2,200 and the securities will be held for three months, what required annual yield must be earned before the investment makes economic sense?

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    Solution Summary

    This solution shows a calculation for estimating the annual yield that must be earned before an investment made by an organization makes economic sense.