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As winner of a breakfast cereal competition, you can choose one of the following prizes: (a) $100,000 now (b) $180,000 at the end of 5
As winner of a breakfast cereal competition, you can choose one of the following prizes: (a) $100,000 now (b) $180,000 at the end of 5 years (c) $11,400 a year forever (d) $19,000 for each of 10 years If the interest rate is 13 percent, which is the most valuable prizes? [Hint: calculate the present values] FVIFr,t = (1+r) FVIFAr,n (1+r)" - 1 r 1 1- (1+r)" PVIFr,t = 1 (1+r)t PVIFAr,n r
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