What rate of return is built into the annuity

Reference no: EM13258133

Suppose you just won the state lottery, and you have a choice between receiving $2,550,000 today or a 20 year annuity of $250,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes.

a. 7.12%
b. 7.49%
c. 7.87%
d. 8.26%
e. 8.67%

Reference no: EM13258133

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