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Question 4 a) Congratulations! You have just won World Chess Championship! However, the organizer has just informed you that you can take your winnings in
Question 4 a) Congratulations! You have just won World Chess Championship! However, the organizer has just informed you that you can take your winnings in one of two ways. Choice 1 pays RM200,000. Choice 2 pays RM275,000 at the end of five years from now. i. Using a discount rate of 5 percent, based on present values, which would you choose? (3 marks) ii. Using the same discount rate of 5 percent, based on future values, which would you choose? (3 marks) iii. What do your results suggest as a general rule for approaching such problems?
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