Question
Susan Earshen has received an amazing grand prize offer in the mail (see copy on next page). The contest rules require that she pre-selea one
Susan Earshen has received an "amazing" grand prize offer in the mail (see copy on next page). The contest rules require that she pre-selea one of two payment options: a single lump-sum payment or an annual payment for each of 25 years. I hope she wins, and that you advise her correctly. If we assume an annual interest rate of 8% for this analysis and that Sue desires the option with the greatest value today, which option should Sue choose? (Show all work) At what interest rate does Sue become equally attracted to each of the two options? (perform linear interpolation if necessary PRIZERAIDOUTIN: One (1) payment of $833,33LP0. financial goal Maximum capital pay out. BENEFIT: Allows for immediate access to mwdmummomloi money IDEAL FOR: This payment plan Is good for those who would like to PRCE PAID OUTIN: Twenty-five (25) annual payments of $66,667.00. FINANCIAL GOAL Long-term security and growth of principal. This parent plan Is ideal for,^ those seeking regularly sched uled additional income for a peri- ' i od of 25 year?, the key feature is;- growth overtime. r:?: of principal over long period pfdrne
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