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You just won a prize and you can receive your reward in one of two ways: a) You are entitled to an immediate payment of
You just won a prize and you can receive your reward in one of two ways:
a) You are entitled to an immediate payment of $23,450 followed a year later by a series of payments of $3,200/year forever
b) You will receive $38,000 now and $8,500/year for 10 years with the first payment a year from now.
The interest rate is 5%. Which option will you choose and why?
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