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Can someone show me how to solve please? Thank you! 13. As a new employee in the Lottery Commission, yourfirst job is to design a
Can someone show me how to solve please? Thank you!
13. As a new employee in the Lottery Commission, yourfirst job is to design a new prize. Your idea is to create two grand prize choices: (1) receiving $50,000 today and then $200,000 at the end of five years, or (2) receiving $50,000 today plus some annuity amount at the end of each year for five consecutive years that starts in 1 year. Using an interest rate of 2%, which of the following comes closest to this prize (2) annuity that will make the presentvalue of both prizes the same? A. $35,479 B. $36,195 C. $36,925 D. $37,671 E. $38,432 14. A zero coupon bond offers $1,000 at the end of the 25th year. Which comes closest to the bonds yieldto maturityifyou buy this bond for $92.30 and holdit till maturity? A. 6% B. 7% C. 8% D. 9% E. 10%Step by Step Solution
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