You have a chance to buy an annuity that pays $50,000 at the beginning of each year for 15 years. You could earn 10.0% on your money in other investments with equal risk. What is the most you should pay for the annuity?

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.