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Suppose you just won the state lottery, and you have a choice between receiving $2,725,000 today or a 20-year annuity of $260,000, with the first

Suppose you just won the state lottery, and you have a choice between receiving $2,725,000 today or a 20-year annuity of $260,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes.

a. 12.47%

b. 6.81%

c. 7.14%

d. 9.54%

e. 8.18%

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