Annuity Plan A has an initial annual payment that starts at $10,000 and grows at 5%...

Annuity Plan A has an initial annual payment that starts at $10,000 and grows at 5% per year. Plan B has a flat payment of $12,500 for the 10 years.

a. Which 10 year annuity is better, if the annual r=8%?

b. At what discount rate would the annuity owner be indifferent between the two plans?

Expert Solution

jeff jeffy answered 1 year ago

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