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Assuming end-of-the-year cash flows, which is the best way to receive the prize money? Show all your calculations. A2. Refer to case study 2 No

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Assuming end-of-the-year cash flows, which is the best way to receive the prize money? Show all your calculations. A2. Refer to case study 2 "No Latte for You!" discussed in class (pages 2.20 -2.24 of your lecture notes). We made the simplifying assumption that the cost of a latte would not increase over time. Now assume that you drink a $4 latte a day and over the month the cost is $80. Assume that the cost of the latte is expected to increase at a rate of 6% per annum, or 0.5% per month forever. As before, you choose to forgo your daily latte and instead invest this now growing) amount at the end of each month in an investment fund that earns an interest rate of 12% p.a. What is the value of your growing investment at the end of: (a) 10 years and (b) 50 years? What are the present values of your investments? Show all calculations and round your final answers to the nearest dollar

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