am.1111. After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscriptioncompany. It has arrived with the good news that you are the big winner, having won $28 million. You have three options:a. Receive $1.4 million per year for the next 20 years.b. Have $10 million today.c. Have $4 million today and receive $1,100,000 for each of the next 20 years.Your financial adviser tells you that it is reasonable to expect to earn 14 percent on investments.Required:1. Calculate the present value of each option. (Future Value of $1.Present Value of $1, Future Value Annuity of $1. Present ValueAnnuity of $1.)2. Determine which option you prefer.Complete this question by entering your answers in the tabs below.Required 1 Required 2Calculate the present value of each option. (Future Value of $1,Present Value of $1, Future Value Annuity of $1,Present-Value Annuity of $1.)Note: Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar. Enter youranswers in dollars, not in millions.Present ValueOption AOption BOntion CShow less

Select option ( C). It has, highest present value

Answered: After hearing a knock at your front…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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