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Rina8888 [55]
3 years ago
7

Ana has won a lottery. she was offered two options to receive the award: she can either take it in five installments of $60,000

annually, starting from now; or she can take a lump-sum of $271,000 now. assuming (a) interest at an annual rate of 5% compounded annually, or (b) interest at an annual rate of 6% compounded continuously, which option should she choose under the consideration of cash value only?
Business
1 answer:
ANTONII [103]3 years ago
8 0
She should choose to<span> take a lump-sum of $271,000 now. This is the best option since the other option would have a present value less than $271,000. If you use the present value annuity calculator, you can get the present value of the installment option to be </span>$259,768.60. Therefore, the the lump – sum payment option is the most appropriate.<span> </span>
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