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Zhang won the lottery; however, the lottery company gave him the following two options to receive his prize money: Option ( a ) : $
Zhang won the lottery; however, the lottery company gave him the following two options to receive his prize money: Option a: $ in three months and $ in ten months. Option b: $ immediately and $ in thirteen months. Assume that money earns pa simple interest and use today as the focal date. a What was the equivalent value of the payments under option a at the focal date? Round to the nearest cent b What was the equivalent value of the payments under option b at the focal date? Round to the nearest cent c Which option would be economically better for Zhang and by how much? a Option a b Option b is better by Round to the nearest cent
Zhang won the lottery; however, the lottery company gave him the following two options to receive his prize money:
Option a: $ in three months and $ in ten months.
Option b: $ immediately and $ in thirteen months.
Assume that money earns pa simple interest and use today as the focal date.
a What was the equivalent value of the payments under option a at the focal date?
Round to the nearest cent
b What was the equivalent value of the payments under option b at the focal date?
Round to the nearest cent
c Which option would be economically better for Zhang and by how much?
a Option a
b Option b
is better by
Round to the nearest cent
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