Cat Bearpaw has just won a sweepstakes and can choose between three prizes. a. $500,000 received 5
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Question:
Cat Bearpaw has just won a sweepstakes and can choose between three prizes.
a. $500,000 received 5 years from now.
b. $100,000 now, plus $100,000 next year, plus $100,000 in two years.
c. $40,000 per year for each of the next thirty years. The first payment occurs in 1 year.
The interest rate is 16% per year.
Calculate the present value of each prize. Which prize is most valuable?
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