a. If she choose to receive the present value of the prize now, how much will she receive? b. If she choose to receive the value 3 years from now, how much will she receive? c. Which of the options will give her higher amount?
a. If she choose to receive the present value of the prize now, how much will she receive? b. If she choose to receive the value 3 years from now, how much will she receive? c. Which of the options will give her higher amount?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 19P
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Question
Assume that Aliza has a winning lottery ticket and she are the given the option of accepting the value of P1,000,000 paying interest three years from now or taking the present value of the P1,000,000 now. The sponsor of the prize is using a 6% interest and discount rate.
a. If she choose to receive the present value of the prize now, how much will she receive?
b. If she choose to receive the value 3 years from now, how much will she receive?
c. Which of the options will give her higher amount?
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