You Have the Option Receiving $4,000 at the End of Every

question 9

Multiple Choice

You have the option receiving $4,000 at the end of every six months for 15 years or a single lump sum of $250,000 at the end of the 15 years. What effective interest rate would make the two options equal in value?

• A) 9.500%
• B) 4.642%
• C) 9.770%
• D) 5.250%
• E) 9.285%