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Charlie Sheen hits the $ 500000 jackpot at the Palms Casino in Las Vegas The casino gives him two options for collecting his winnings Option A Sheen can take all of his winnings today They will

Charlie Sheen hits the $ 500,000 jackpot at the Palms Casino in Las Vegas. The casino gives him two options for collecting his winnings: Option A: Sheen can take all of his winnings today. They will be taxed by the federal government at 40%. Option B: Sheen can receive his winnings on an installment plan. He would receive 15 equal payments of $ 40,000 beginning today. Each payment will be taxed at a rate of 20%. Given an interest rate of 7%, compounded annually, which option should Sheen choose?

Apr 01 2020 View more View Less

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