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Suppose you just won the state lottery, and you have a choice between receiving $3,125,000 today or a 20-year annuity of $280,000, with the first

Suppose you just won the state lottery, and you have a choice between receiving $3,125,000 today or a 20-year annuity of $280,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes.

a. 6.00%

b. 12.82%

c. 6.34%

d. 8.96%

e. 7.23%

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