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Assume that money earns 4.75% p.a. simple interest and use today as the focal date. a. What was the equivalent value of the payments under option (a) at the focal date? Round to the nearest cent b. What was the equivalent value of the payments under option (b) at the focal date? Round to the nearest cent c. Which option would be economically better for Ian and by how much? O a. Option (a) O b. Option (b) is better by Round to the nearest cent ←

Assume that money earns 4.75% p.a. simple interest and use today as the focal date. a. What was the equivalent value of the payments under option (a) at the focal date? Round to the nearest cent b. What was the equivalent value of the payments under option (b) at the focal date? Round to the nearest cent c. Which option would be economically better for Ian and by how much? O a. Option (a) O b. Option (b) is better by Round to the nearest cent ←

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Ian won the lottery; however, the lottery company gave her the following two options to receive her prize money: ● Option (a): $8,000 in four months and $18,000 in nine months. • Option (b): $3,000 immediately and $24,000 in twelve months. Assume that money earns 4.75% p.a. simple interest and use today as the focal date. a. What was the equivalent value of the payments under option (a) at the focal date? Round to the nearest cent b. What was the equivalent value of the payments under option (b) at the focal date? Round to the nearest cent c. Which option would be economically better for Ian and by how much? O a. Option (a) O b. Option (b) is better by Round to the nearest cent SAVE PROG
Transcribed Image Text:Ian won the lottery; however, the lottery company gave her the following two options to receive her prize money: ● Option (a): $8,000 in four months and $18,000 in nine months. • Option (b): $3,000 immediately and $24,000 in twelve months. Assume that money earns 4.75% p.a. simple interest and use today as the focal date. a. What was the equivalent value of the payments under option (a) at the focal date? Round to the nearest cent b. What was the equivalent value of the payments under option (b) at the focal date? Round to the nearest cent c. Which option would be economically better for Ian and by how much? O a. Option (a) O b. Option (b) is better by Round to the nearest cent SAVE PROG
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