Your dreams of becoming rich have just come true. You have won the State of​ Tranquility's Lottery. The State offers you two payment plans for the​$4,000,000 advertised jackpot. You can take annual payments of $160,000 at the end of the year for the next 25 years or $1,864,573 today.   c. At what investment rate will the annuity stream of ​$160,000 be the same as the​ lump-sum payment of $1,864,573​?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Your dreams of becoming rich have just come true. You have won the State of​ Tranquility's Lottery. The State offers you two payment plans for the​$4,000,000 advertised jackpot. You can take annual payments of $160,000 at the end of the year for the next 25 years or $1,864,573 today.

 

c. At what investment rate will the annuity stream of ​$160,000 be the same as the​ lump-sum payment of $1,864,573​?

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