Jessie won a lottery and was given the following choice.He could either take $5000 at the end of each month for 25 years,or a lump sum of $700 000.Assume annual compounding and determine what interest rate he would have to beat for the lump sum to be the better choice.
A)3)1
B)12.3
C)7)0
D)7)4

Question

Quizplus · Accepted Answer

The lump sum is equivalent to an annuity of $5000 per month for 25 years at an interest rate of 7.4%.

Jessie Won a Lottery and Was Given the Following Choice