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?
1 answer:
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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