Peggy just won the lottery! She could either receive $75,000 today or $1,000,000 in 40 years. At what rate of interest, compounded annually, would Peggy be indifferent between accepting the lottery winnings of $75,000 today and investing it on her own? A) 6.7% B) 6.1% C) 5.5% D) 2.4%
Peggy just won the lottery! She could either receive $75,000 today or $1,000,000 in 40 years. At what rate of interest, compounded annually, would Peggy be indifferent between accepting the lottery winnings of $75,000 today and investing it on her own? A) 6.7% B) 6.1% C) 5.5% D) 2.4%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Peggy just won the lottery! She could either receive $75,000 today or $1,000,000 in 40 years. At what rate of interest, compounded annually, would Peggy be indifferent between accepting the lottery winnings of $75,000 today and investing it on her own?
A) 6.7%
B) 6.1%
C) 5.5%
D) 2.4%
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