Jack and Jill have been together for many years. While vacationing in Niagara Falls, Ontario, Jill won a prize at the Casino and was presented with the following options:

i)       Receive $10,000 in 1 year

ii)      Receive $20,000 in 5 years

iii)     Receive $30,000 in 10 years

 

Assume Jill does not need the money today and will be able to collect it.

 

Questions:

a. If interest rates are 10% p.a., which option should Jill select? 

b. If interest rates are 20% p.a., which option should Jill select? 

c. Assume Jill is offered another option; $15,000 today, or $1,000 per year for the next 30 years.  If interest rates are 6% p.a., which option should Jill select?