Question: (5 marks) Billy is offered two payment plans. One is a perpetuity-immediate paying $1000 every year at 10% effective interest per year. The other is

(5 marks) Billy is offered two payment plans. One is a

(5 marks) Billy is offered two payment plans. One is a perpetuity-immediate paying $1000 every year at 10% effective interest per year. The other is an annuity-immediate paying $1450 every year at 8% per year for 10 years, plus an extra $500 with the 5th payment. Which payment plan has a larger present value

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