question 6

As winner of a breakfast cereal competition, you can choose one of the following prizes:

a. If the interest rate is 20%, find the PV for each of the prizes. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

pv of :

$270,000 now

$197,000 at the end of five years

$19,900 a year forever

$27,500 for each of 10 years

$8,200 next year and increasing thereafter by 6% a year forever

6 b. Which is the most valuable prize?

multiple choice

$270,000 now.

$197,000 at the end of five years.

$19,900 a year forever.

$27,500 for each of 10 years.

$8,200 next year and increasing thereafter by 6% a year forever.