Question: You should keep atleast 6 decimal points for all numbers in the calculation steps and 2 decimal points in the final answer(both dollar amount and

You should keep atleast 6 decimal points for all numbers in the calculation steps and 2 decimal points in the final answer(both dollar amount and %, i.e.$12.34 and12.34%)

James Holloway has just won a television game show. There are two ways in which James can receive his price:

Option 1: a once-off payment of $100,000 in 18 months.

Option 2: a payment of $5000 a month for 18 months with the payment increases by 0.5% every month.

Assuming that the monthly discount rate is 2% and that interest rate compounds monthly, which option is financially better for James?

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