Suppose you have won a competition and that you are given the choice between $180000 now or $10000 at the start of each year, for the rest of your life. Assume that the bank has a constant interest rate of 6% and that you currently have no debts (so that your decision is a purely rational one, based on "present value"). 

What should you choose if you think you will live (a)until 65, (b) until 100, (c)forever? (Ignore (a) if you are over 65.)

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a Besent value of 10000 per year for next 45 ... View the full answer