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Congratulations! You have just won a lottery and have a choice between the following two alternatives: 1)$12,000 per year for 20 years; or 2)$50,000 today
Congratulations! You have just won a lottery and have a choice between the following two alternatives:
1)$12,000 per year for 20 years; or
2)$50,000 today and $300,000 twenty years later.
If the appropriate discount rate is 10%, which option should you choose and why?
[Hint: Compare the PV of each alternative]
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