Please explain why each table and factor was chosen for the calculation. After hearing a knock at
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Please explain why each table and factor was chosen for the calculation.
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After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $39 million. You have three options: a. Receive $1.95 million per year for the next 20 years. b. Have $12.75 million today. c. Have $2.75 million today and receive $1,650,000 for each of the next 20 years. Your financial adviser tells you that it is reasonable to expect to earn 13 percent on investments. Required: 1. Calculate the present value of each option. (Euture Value of $1.Present Value of $1, Future Value Annuity of $1. Present Value Annuity of $1.) 2. Determine which option you prefer. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the present value of each option. (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar. Enter your answers in dollars, not in millions. Present Value Option A $ 13,696,800 Option B $ 12,750,000 Option C S 14,339,600 Required Required 2 > Show less After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $39 million. You have three options: a. Receive $1.95 million per year for the next 20 years. b. Have $12.75 million today. c. Have $2.75 million today and receive $1,650,000 for each of the next 20 years. Your financial adviser tells you that it is reasonable to expect to earn 13 percent on investments. Required: 1. Calculate the present value of each option. (Euture Value of $1.Present Value of $1, Future Value Annuity of $1. Present Value Annuity of $1.) 2. Determine which option you prefer. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the present value of each option. (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar. Enter your answers in dollars, not in millions. Present Value Option A $ 13,696,800 Option B $ 12,750,000 Option C S 14,339,600 Required Required 2 > Show less
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