Several years ago, a woman won $50 million in the state lottery. To pay off the winner, the state offered three payment plans to the woman. Plan 1 included an immediate payment of $12 million followed by 13 annual payments of $4.5 million. Plan 2 consisted of an immediate payment of $19 million followed by 9 equal annual payments of $5 million. Plan 3 included an immediate payment of $50 million. Calculate the present worth (PW) of each plan and determine which plan should be considered by a woman. Consider a MARR of 6%.
Several years ago, a woman won $50 million in the state lottery. To pay off the winner, the state offered three payment plans to the woman. Plan 1 included an immediate payment of $12 million followed by 13 annual payments of $4.5 million. Plan 2 consisted of an immediate payment of $19 million followed by 9 equal annual payments of $5 million. Plan 3 included an immediate payment of $50 million. Calculate the present worth (PW) of each plan and determine which plan should be considered by a woman. Consider a MARR of 6%.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Several years ago, a woman won $50 million in the state lottery. To pay off the winner, the state offered three payment plans to the woman. Plan 1 included an immediate payment of $12 million followed by 13 annual payments of $4.5 million. Plan 2 consisted of an immediate payment of $19 million followed by 9 equal annual payments of $5 million. Plan 3 included an immediate payment of $50 million. Calculate the present worth (PW) of each plan and determine which plan should be considered by a woman. Consider a MARR of 6%.
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