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Assume you have just won an essay competition, and you are offered two options for your prize money, either $500 one year from now or
Assume you have just won an essay competition, and you are offered two options for your prize money, either $500 one year from now or $450 today.
(a) If the interest rate is 5%, which prize do you accept?
(b) If the interest rate is 12%, which prize do you accept?
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