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Debra Wilcox won $6.5 million in the California lottery. She must choose how she wants the...

Debra Wilcox won $6.5 million in the California lottery. She must choose how she wants the prize to be paid to her. First, Debra can elect to receive 26 annual payments, with the first payment due immediately. Second, she can elect to receive a single payment immediately for the entire amount. However, if she elects the single payment option, the winning prize is reduced to 60% of the winning. What rate would make Deborah indifferent about these two options?

26 Annual Payments:

N = I/Y =        PV =        PMT =    FV =

1 Payment Amount:

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