Suppose You Just Won the State Lottery, and You Have

question 23

Multiple Choice

Suppose you just won the state lottery, and you have a choice between receiving $2,550,000 today or a 20-year annuity of $250,000, with the first payment coming one year from today.What rate of return is built into the annuity? Disregard taxes.

• A) 7.12%
• B) 7.49%
• C) 7.87%
• D) 8.26%
• E) 8.67%

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