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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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