Question

Suppose you are given a choice of the following two securities: (a) an annuity that pays $10,000 at the end of each of the next 6 years; or (b) a perpetuity that pays $10,000 forever, but the first cash payment is 11 years from today. Which security do you choose if the annual interest rate is 5%? 1 point (a) an annuity that pays $10,000 at the end of each of the next 6 years (b) a perpetuity that pays $10,000 forever, but the first cash payment is 11 years from today

Answer 1

Answer:

I will choose option a as it annuity is of 6 years and it is well nice

Answer 2

Answer:

b

Explanation:

perpetuity that pays $10,000 forever, but the first cash payment is 11 years from today