hoice A: $90,000 now, Choice B: $10,000 at the end of each year from year 1 to year 5 and $20,000 at the end of each year from year 6 to year 1

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Jim has just won the lottery. He is offered 2 choices to access his winnings. Choice A: $90,000 now, Choice B: $10,000 at the end of each year from year 1 to year 5 and $20,000 at the end of each year from year 6 to year 10. Find the discounted present value of these twochoices if the relevant interest rate is 8% per year and state the better choice for Jim?

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