Question
As the winner of the Housecleaners sweepstakes, you are entitled to one of the following prizes: A. $999,999 immediately. B. $100,000 per year forever. C.
As the winner of the Housecleaners sweepstakes, you are entitled to one of the following prizes: A. $999,999 immediately. B. $100,000 per year forever. C. $180,000 per year for the next 10 years starting immediately. D. $39,000 next year growing by 6% forever. Calculate the NPV of each prize if r = 9%. Round to the nearest dollar. Which prize should be chosen?
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Financial Markets and Institutions
Authors: Anthony Saunders, Marcia Cornett
6th edition
9780077641849, 77861663, 77641841, 978-0077861667
