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After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It
After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $39 million. You have three options. (a) Receive $1.95 million per year for the next 20 years. (6) Have $12.75 million today. (c) Have $2.75 million today and receive $1,650,000 for each of the next 20 years. Your financial adviser tells you that it is reasonable to expect to earn 13 percent on investments. Required: 1. Calculate the present value of each option. (Future Value of $1, Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole doller. Enter your answers in dollars, not in millions.) Option A Option B Option C Present Value 2. Determine which option you prefer. O Option A: O Option B O Option C
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