1. When Bridget takes a new job, she is offered the choice of a $2300 bonus now...

Question:

1. When Bridget takes a new job, she is offered the choice of a $2300 bonus now or an extra $200 at the end of each month for the next year. Assume money can earn an interest rate of 3.3% compounded monthly.
(a) What is the of payments of $200 at the end of each month for 12 months?
(b) Which option should Bridget choose?
A lottery winner is given two options:
Option I: Receive a $20 million lump-sum payment.
Option II: Receive 25 equal annual payments totaling $60 million, with the first payment occurring immediately.
If money can earn 6% interest compounded annually during that long period, which option is better? With each option, calculate the amount of money earned at the end of 24 years if all of the funds are to be deposited into a savings account as soon as they are received?
Future Value
Future value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth...