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Home / Questions / You have two options. Option 1 is receiving $8,000 in one year, then a 3.7% higher dollar ...

You have two options. Option 1 is receiving $8,000 in one year, then a 3.7% higher dollar amount one year after that, again a 3.7% higher amount of money another year after that, and so on forever

You have two options. Option 1 is receiving $8,000 in one year, then a 3.7% higher dollar amount one year after that, again a 3.7% higher amount of money another year after that, and so on forever. These amounts of money would be received by you, your children, your grandchildren, and all your future heirs. Option 2 is instead receiving an equivalent amount of money in one lump-sum amount today, and nothing else in any future years. What is the dollar amount of this Option 2? You also know that the appropriate discount rate is 10.4%.

Apr 13 2021 View more View Less

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