Question
Assume that you just won a prize from UAE government for your work in fighting COVID-19 pandemic. Your prize can be taken either in the
Assume that you just won a prize from UAE government for your work in fighting COVID-19 pandemic. Your prize can be taken either in the form of AED 30,000 at the end of each of the next 25 years (that is, AED 750,000 over 25 years) or as a single amount of AED 400,000 paid immediately. a. If you expect to be able to earn 3% annually on your investments over the next 25 years, ignoring taxes and other considerations, which alternative should you take? Why? b. Would your decision in part a change if you could earn 8% rather than 3% on your investments over the next 25 years? Why? You may use the following formulas:
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