Suppose You Have a Choice Between Receiving a Lump-Sum Payment

question 25

Multiple Choice

Suppose you have a choice between receiving a lump-sum payment of $10,000 today or four annual payments of $2,750 (with the first payment one year from today) .Of the following,which is the lowest annual interest rate at which you would prefer the lump-sum payment over the four annual payments?

• A)2%
• B)​5%
• C)​7%
• D)​10%

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