Question
Chuck has just won the Flpyball Lottery. He has two options for receiving his prize. The first option is to accept a $131,000 cash payment
Chuck has just won the Flpyball Lottery. He has two options for receiving his prize. The first option is to accept a $131,000 cash payment today. The second option is to receive $19,300 at the end of each of the next 14 years and a $24,100 lump sum payment in the 15th year. Chuck can invest money at a 11% rate.
(a) Calculate the present value of the two options
| Option 1 | Option 2 | |
| Present Value | $ | $ |
Which option should Chuck choose to receive his winnings?
(b) If Chuck could invest money at 14%, calculate the present value of the two options
| Option 1 | Option 2 | |
| Present Value | $ | $ |
Which option should he choose?
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Financial Reporting Exam Kit Kaplan Approved Acca
Authors: Kaplan Publishing
1st Edition
9781787404137
