At what discount rate would he be indifferent the plans

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Reference no: EM131964386

Josh is looking at investment opportunities with an adviser, who has 2 different plans. Plan A is a $25,000 annual perpetuity.

Plan B is a 15-year, $35,000 annual annuity. Regardless of the plan he decides on, he will only get the first payment one year from today.

At what discount rate (r) would he be indifferent between the two plans?

Reference no: EM131964386

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