You just won the lottery. You and your heirs will receive $40,000 per year forever, beginning one
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Question:
You just won the lottery. You and your heirs will receive $40,000 per year forever, beginning one year from now. If the present value of the lottery is $500,000, what is the discount rate used to value this perpetuity.
A. 7.5%
B. 8.0%
C. 8.5%
D. 9.0%
E. 9.5%
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