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Schach [20]
3 years ago
5

Your girlfriend just won the Florida lottery. She has the choice of $15,000,000 today or a 20-year annuity of $1,050,000, with t

he first payment coming one year from today. What rate of return is built into the annuity?

Business
1 answer:
Makovka662 [10]3 years ago
3 0

Answer:

3.44%

Explanation:

For this question we use the RATE formula that is shown on the attachment

Data provided in the question

Present value = $15,000,000

Future value or Face value = $0

PMT = $1,050,000

NPER =  20 years

The formula is shown below:  

= Rate(NPER;PMT;-PV;FV;type)  

The present value come in negative  

So, after solving this, the rate pf the return is 3.44%

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