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Consider a lottery that pays to the winner an annual annuity of $ 8 0 that begins in one year and continues for 8 consecutive

Consider a lottery that pays to the winner an annual annuity of $

80

that begins in one year and continues for

8

consecutive years with one exception

- -

the payment at the end of year

3 (

and only in this year

)

is not $

80

but instead is $

120 .

Using an interest rate of

5 %,

determine the present value of this prize.

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