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You have won the Florida state lottery. Lottery officials offer you the choice of the following alternative payments: Alternative 1: $10,000 one year from now.

You have won the Florida state lottery. Lottery officials offer you the choice of the following alternative payments:

Alternative 1: $10,000 one year from now.

Alternative 2: $20,000 five years from now.

Which alternative should you choose if the annual discount rate is

a. 0%

b. 10%

c. 20%

What discount rate makes the two alternatives equally attractive to you.

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