Question
Arvidas recently won the Central States Lottery of $3,500,000.The lottery pays either a total of twenty $175,000 payments peryear with the first payment today (i.e.,
Arvidas recently won the Central States Lottery of $3,500,000.The lottery pays either a total of twenty $175,000 payments peryear with the first payment today (i.e., an annuity due), or$2,000,000 today. At what interest rate would Arvidas befinancially indifferent between these two payout choices?
8.00%
6.88%
6.04%
6.36%
Arvidas recently won the Central States Lottery of $3,500,000.The lottery pays either a total of twenty $175,000 payments peryear with the first payment today (i.e., an annuity due), or$2,000,000 today. At what interest rate would Arvidas befinancially indifferent between these two payout choices?
8.00% | ||
6.88% | ||
6.04% | ||
6.36% |
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
978-0538453257
