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navik [9.2K]
2 years ago
14

13. You just won a prize that comes with two payout choices. The first option is to get $100,000 right now and nothing hereafter

. The second option is to get $94,000 right now and $10,000 three years from now (and nothing after that). If your discount rate is 8%, which should you take?
Business
1 answer:
babymother [125]2 years ago
8 0

Answer:

C.second option

Explanation:

The computation is shown below

The present value of option 1 is $100,000

And, the present value of option 2 is

= $94,000 + $10,000 × Present value of discounting factor(8%,3)

= $94,000 + ($10,000 ÷ 1.08^3)

= $101,938.32

So as we can see that the option 2 has the highest present value so the right option is c.

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Answer:

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Explanation:

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<em>brainly.com/question/13719669</em>

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