Answer:

Discount Rate = 9%

Explanation:

Martha won: $16,800,000

Number of installments = 30

The annual payment = amount won/ number of installments

= 16,800,000 / 30 = $560,000

___________________________

Individual share of 50% each = $560,000 * 50% = $280,000

Since the investor offered Martha $2,555,980 which is the future value for the remaining period of 20 years, we have:

Future Value = Present Value x PVAF (I, 20 Years)

$2,555,980 = $280,000 × PVIFA (I, 20 years)

PVIFA (I, 20 years) = 2555980/280000

PVIFA (I, 20 years) = 9.1285

From Present value annuity Tables, the factor value for 20 years 9.1285 is for 9%

Therefore, the discount rate the investor used in calculating the purchase price is 9%