Annuity a Makes Annual Payments of $813

question 12

Essay

Annuity A makes annual payments of $813.73 for each of the next 10 years, while annuity B makes annual payments of $500 per year forever. At what interest rate would you be indifferent between the two? At interest rates above/below this break-even rate, which annuity would you choose?

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Definitions:

Apprehensive

Feeling anxious or fearful that something bad or unpleasant will happen.

Main Points

The primary or most important ideas, facts, or arguments presented in a discussion or text.

Memorable Take-Away

A key impression or central message that remains with the audience after a presentation or communication.

Presentation Conclusion

The final part of a presentation where the main points are summarized and the audience is left with a strong take-away message.