Three annual payments if the interest rate

Reference no: EM13699034

Suppose you win a small lottery and you are given the following choice: You can (1) receive an immediate payment of $10,000 or (2) three annual payments, each in the amount of $3,600, with the first payment coming from one year from now, the second two years from now, and the third three years from now. You would choose to take the three annual payments if the interest rate is

a. 2 percent, but not if the interest rate is 3 percent

b. 3 percent, but not if the interest rate is 4 percent

c. 4 percent, but not if the interest rate is 5 percent

d. 5 percent, but not if the interest rate is 6 percent

Reference no: EM13699034

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