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Assume that you have won a mini $6,000 lottery. You are provided with two options: a. Take a $5,600 instant payout today, OR b. Receive

Assume that you have won a mini $6,000 lottery. You are provided with two options:

a. Take a $5,600 instant payout today,

b. Receive 6 installments of $1,000 every year, with the first installment paid out today.

If you are a rational investor - which I am sure you are - and the appropriate rate of interest is 2.5%, which option should you take and why? Provide quantitative calculations and support for your choice.

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