Tom plans to gamble each year for the next 20 years, starting at at the end of year 1. If he loses 4.47 dollars in odd years (i.e., years 1, 3, 5, etc) and wins 7.46 dollars in even years (i.e., years 2,4, 6 etc), what will be Tom's (internal) rate of return per year from gambling?

To find Tom's internal rate of return per year from gambling, we need to calculate the average annual return based on the cash flows provided.

First, let's determine the total amount Tom will lose over the 20 years. Since he loses $4.47 in odd years, we can calculate the total loss as follows:

Total loss from odd years = 4.47 * (20/2) = $44.70

Next, let's determine the total amount Tom will win over the 20 years. Since he wins $7.46 in even years, we can calculate the total win as follows:

Total win from even years = 7.46 * (20/2) = $74.60

Now, let's calculate the net cash flow by subtracting the total loss from the total win:

Net cash flow = Total win - Total loss
= $74.60 - $44.70
= $29.90

Tom's net cash flow over the 20 years is $29.90.

To find the internal rate of return (IRR), we need to calculate the discount rate that makes the net cash flow equal to zero. Since Tom's net cash flow is positive, we can use a finance calculator or spreadsheet software to find the IRR.

Using a financial calculator or spreadsheet, we can input the cash flows over the 20 years and calculate the IRR. Assuming we input -$44.70 for the odd years and $74.60 for the even years, and an initial investment of -$44.70 at the end of year 1, we should find the IRR to be:

IRR ≈ 2.48%

Therefore, Tom's internal rate of return per year from gambling is approximately 2.48%.