18,000 for an annuity that pays $3000 per year for the next 10 years. You wa and you estimate inflation will average 6% per year. Should you buy the an
18,000 for an annuity that pays $3000 per year for the next 10 years. You wa and you estimate inflation will average 6% per year. Should you buy the an
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:You may pay $18,000 for an anmuity that pays $3000 per year for the next 10 years. You want a real rate
of retum of 5%, and you estimate inflation will average 6% per year. Should you buy the annuity?
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