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You can choose any one of the following prizes. If your discount rate is 10.5% (annual compounding), which is the most valuable prize, i.e. has the greatest present value?

(A) A lump sum payment of $25,000 at the end of 10 years.

(B) A lump sum payment of $10,000 today.

(D) A perpetual stream of annual payments of $1,000 starting in one year.

(E) Five annual payments of $2,800 - the first payment occurs one year from today.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92424904

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