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You recently won a lottery and have the option of receiving one of the following three prizes: (1) $72,000 cash immediately, (2) $25,000 cash immediately
- You recently won a lottery and have the option of receiving one of the following three prizes: (1) $72,000 cash immediately, (2) $25,000 cash immediately and a six-year annual annuity of $8,200 beginning one year from today, or (3) a six-year annual annuity of $14,100 beginning one year from today. Assuming an interest rate of 5% compounded annually, determine the present value for the above options. Which option should you choose?
- A company wants to accumulate a sum of money to repay certain debts due in the future. The company will make annual deposits of $135,000 into a special bank account at the end of each of 10 years. Assuming the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made in ten years?
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