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Now it's time for you to practice what you've learned. Suppose that Ana just won the lottery and must choose between three award options: A

Now it's time for you to practice what you've learned.
Suppose that Ana just won the lottery and must choose between three award options:
A lump sum of $35,000,000 received today
15 end-of-year payments of $4,375,000
40 end-of-year payments of $3,150,000
Assume the interest rate is 8.00%, entered as 8 on your financial calculator.
Note: Take the absolute value of the present value when answering this question.
Using a financial calculator yields a present value for option 2 of approximately
approximately
(when the interest rate is 8.00%). Based on this, Ana should choose option
if she seeks to maximize
present value.
Now assume the interest rate is 9.00%, entered as 9 on your financial calculator.
Note: Take the absolute value of the present value when answering this question.
Using the table you just filled out and a financial calculator, yields a present value for option 2 of approximately
present value for option 3 of approximately _(when the interest rate is 9.00%). Based on this, Ana should choose option
if she seeks to maximize present value.
Assume the interest rate is 10.00%, entered as 10 on your financial calculator.
Note: Take the absolute value of the present value when answering this question.
Using the table you just filled out and a financial calculator, yields a present value for option 2 of approximately
present value for option 3 of approximately
_(when the interest rate is 10.00%). Based on this, Ana should choose option
if she seeks to maximize present value.
As the interest rate increases, options 2 and 3 become
attractive, relative to option 1.
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