# Time value of money - annuity

Aug 2nd, 2016
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Solution to: Your financial planner offers you two different investment plans

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Question 8The PV of the two options is equal to each other to be indifferent,PV = \$25,000/rAnd the PV of the annuity is:PVA = \$35,000 [{1 [1/(1 +r)15]}/r]Setting them equal and solving for, we get:\$25,000/r=\$35,000[{1[1/(1+r)15]}/r]\$25,000/\$35,000=1[1/(1+r)15]0.92 = 1/1+rR = 0.087

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