The rate of return would David need to break even if he took the lump sum amount instead of the annuity is 5.56%.
<h3>Rate of return to break even</h3>
First step is to calculate the rate for the period of 25 years
Rate= Single lump sum/Dollar amount received×100
Rate=$10 million/$750,000×100
Rate= 13.33%
Second step
Using annuity date to find the rate of return needed to break even. Based on the Annuity table 13.33% for the time period of 25 years is 5.56%.
Therefore the rate of return would David need to break even if he took the lump sum amount instead of the annuity is 5.56%.
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It will 19.5 years.
Tuition=$125,000
Interest rate= 5%
5% of $125,000 = $6,250
$125,000 + $6,250 = $131,250
$131,250/$562(monthly payment) = 233.540925
233.540925/12(months in a year) = 19.4617438
round up and it 19.5 years
a meeting of people face to face. most of the time when you are in an interview you are applying for a job :)
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