You have just won the state lottery and have two choices for collecting your winnings. You can collect $111,000 today or receive $21,900 at the end of each year for the next seven years. A financial analyst has told you that you can earn 9 percent on your investments. Required: 1. Calculate the present value of both the options (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. 2. Which alternative should you select?

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
Section: Chapter Questions
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You have just won the state lottery and have two choices for collecting your winnings. You can collect $111,000 today or receive
$21,900 at the end of each year for the next seven years. A financial analyst has told you that you can earn 9 percent on your
investments.
Required:
1. Calculate the present value of both the options (FV of $1, PV of $1, FVA of $1, and PVA of $1)
Note: Use appropriate factor(s) from the tables provided.
2. Which alternative should you select?
Transcribed Image Text:You have just won the state lottery and have two choices for collecting your winnings. You can collect $111,000 today or receive $21,900 at the end of each year for the next seven years. A financial analyst has told you that you can earn 9 percent on your investments. Required: 1. Calculate the present value of both the options (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. 2. Which alternative should you select?
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