Purchasing a lifetime subscription

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Reference no: EM1354980

Your subscription to Jogger's World is about to run out and you have the choice of renewing it by sending in the $10 a year regular rate at the end of each year or of getting a lifetime subscription to the magazine by paying $100 today. Your cost of capital is 7 percent. How many years would you have to live to make the lifetime subscription the better buy? Assume payments for the regular subscription are made at the end of each year. (Round up if necessary to obtain a whole number of years.)

a. 10 years
b. 15 years
c. 18 years
d. 20 years
e. 28 years

 

Reference no: EM1354980

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