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You have just won a lottery which offers a choice in how you may receive your prize If the interest rate is 10% per annum compounded annually which of the following prizes has the highest present

You have just won a lottery, which offers a choice in how you may receive your prize. If the interest rate is 10% per annum, compounded annually, which of the following prizes has the highest present value?

  a.

a perpetuity of $250,000 per year starting one year from now

  b.

$3,000,000 at the end of five years

  c.

an ordinary annuity of $300 000 per year for each of the next 10 years (starting one year from now)

  d.

$2,000,000 immediately

  e.

$3,500,000 at the end of nine years

 

May 18 2020 View more View Less

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