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Flower Investment Management offered Sarah Peng two investment plans. Plan A is an annuity, which will make 10 payments of $10,000 every quarter starting 2
Flower Investment Management offered Sarah Peng two investment plans. Plan A is an annuity, which will make 10 payments of $10,000 every quarter starting 2 years from today. Plan B is a perpetuity, which will pay $5,000 every quarter forever starting 2 years from today. At what annual rate of return would Sarah be indifferent between these two plans?
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