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    Choosing an annuity

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    You have been offered two annuities for the same price. Annuity 1 pays $50,000 per year at the end of the year for 10 years. Annuity 2 pays $40,000 per year at the end of the year for 20 years. If your cost of capital is 10%, which of these two annuities is a better deal, why?

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    https://brainmass.com/business/annuity/choosing-annuity-273253

    Solution Preview

    Here we will calcuate the Present value of annuity under both the situations:

    Annuity 1 pays $50,000 per year at the end of the year for 10 ...

    Solution Summary

    The response helps in providing steps of choosing an annuity.

    $2.19

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