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Business, 19.11.2019 05:31 innocentman69

Alocal government is about to run a lottery but does not want to be involved in the payoff if a winner picks an annuity payoff. the government contracts with a trust to pay the lump-sum payout to the trust and have the trust (probably a local bank) pay the annual payments. the first winner of the lottery chooses the annuity and will receive $150,000 a year for the next 25 years. the local government will give the trust $2,000,000 to pay for this annuity. what investment rate must the trust earn to break even on this arrangement?

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