Question: (PLEASE SHOW ALL WORK AND VALUES) (PLEASE SHOW ALL WORK AND VALUES) 39) Your dreams of becoming rich have just come true. You have won

(PLEASE SHOW ALL WORK AND VALUES)

39) Your dreams of becoming rich have just come true. You have won the State of Tranquility's lottery. The state offers you two payment plans for the $5,000,000 advertised jackpot. You can take the annual payments of S250,000 for the next twenty years or $2,867,480 today. a. If your investment rate is 8%, which payoff will you choose? b. If your investment rate is 5%, which payoff will you choose? c. At what investment rate will the annuity stream of $250,000 be the same as the lump- sum payment of $2,867,480

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