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A2-8 You just won a lottery! The annuitized jackpot involves payments to you, with the amounts listed below. Payment 10,000 15,000 20,000 25,000 30,000 35,000

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A2-8 You just won a lottery! The annuitized jackpot involves payments to you, with the amounts listed below. Payment 10,000 15,000 20,000 25,000 30,000 35,000 Year 0 You currently have savings in a brokerage account that have averaged 10%) returns for each of the last five years, aid you expect that level of annual return to continue over each of the next five years. For each of the following questions, support your decision with a proper time value of money calculation. If the lottery offered you $90,000 today in lieu of the above stated payments, would you take the cash or the six payments over the next five years? A) B) If you accept the payments and invest the money in your broker- age account, how much cash will have accrued from the lottery payments and accrued interest by the end of year five? C) Beginning today (time zero), what five uniform beginning of period payments would be equivalent to the original annual payments

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