Annuity a makes annual year-end payments of 97650 for each, Ask an Expert

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Annuity A makes annual year-end payments of $976.50 for each of the next 10 years, while investment B makes annual year-end payments of $600 per year forever.

Show your work for the following two questions:

a. At what interest rate would you be indifferent between the two investments?

b. At interest rates above/below this break-even rate, which investment would you choose and why?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91379742

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