Question
Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $21,000 cash
Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $21,000 cash immediately and a six-period annuity of $7,700 beginning one year from today, or (3) a six-period annuity of $13,300 beginning one year from today.
1. Assuming an interest rate of 7%, determine the present value for the above options. Which option should Alex choose? 2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2027. Weimer will make annual deposits of $115,000 into a special bank account at the end of each of 10 years beginning December 31, 2018. Assuming that the bank account pays 8% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2027?
Assuming an interest rate of 7%, determine the present value for the above options. Which option should Alex choose? (Round your final answers to nearest whole dollar amount.)
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