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Your pension will pay approximately 6 , 0 0 0 a year . British government 2 0 - year bonds yield 2 . 6 0

Your pension will pay approximately 6,000 a year . British government 20-year bonds yield 2.60%. You are offered a lump sum in return for a waiver on annual payments. How much should you ask for? Annual yield of 2.6% is quoted as an EAR (effective annual rate).

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