Two investment options are as follows.
Choice 1: Payments of $ 2550 now, $ 3250 a year from now, and $ 4040 two years from now.
Choice 2: Three yearly payments of $ 3250 starting now.
Assume interest is compounded continuously. What is the interest rate that would make both choices equally lucrative?
1 answer
The interest rate that would make both choices equally lucrative is 8.2%.