You have a choice between a lottery lump sum payout of $10,000,000 today or a series of twenty-five annual annuity payments (first payment one year from today)
At a discount rate of 6.50%, how large must the annual annuity payments be to make you indifferent between the two choices?
A) $819,814.81
B) $873,102.77
C) $769,779.17
D) $400,000.00
Answer: A
Explanation: A)
PMT = PV / = $10,000,000/ = $819,814.81.
MODE = END
INPUT 25 6.5 10,000,000 ? 0
KEY N I/Y PV PMT FV
CPT 819,814.81
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