2.2.2. Basic questions

Q-6

As winning a lottery, Mikey has three options to get bonus.

Option 1: An ordinary annuity with 20 annual payments of $2,000

Option 2: An Annuity due with 20 annual payments of $2,000

Option 3: A Perpetuity with annual payments of $2,000

Assuming the annual discount rate is 5 percent, which option is the last one for Mikey to

choose?

A. Option 1

B. Option 2

C. Option 3