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Arvidas recently won the Central States Lottery of $3,500,000. The lottery pays either a total of twenty $175,000 payments per year with the first payment
Arvidas recently won the Central States Lottery of $3,500,000. The lottery pays either a total of twenty $175,000 payments per year with the first payment today (i.e., an annuity due), or $2,000,000 today. At what interest rate would Arvidas be financially indifferent between these two payout choices?
8.00% | ||
6.88% | ||
6.04% | ||
6.36% |
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