Jane Wilson won a lottery. The British Columbia Lottery Commission offers her three payout options to receive her prize: Option 1 Receive CAD 140,000 at the end of 10 years. Option 2 Receive CAD 12,000 at the end of each of the next ten years. Option 3 Receive CAD 5,000 at the end of each of the next ten years plus CAD 10,000 at the end of each of the ten subsequent years. The interest rate is 5.0%, compounded annually. REQUIRED: 1. Which option should Jane select?

Jane Wilson won a lottery. The British Columbia Lottery Commission offers her three payout options to receive her prize: Option 1 Receive CAD 140,000 at the end of 10 years. Option 2 Receive CAD 12,000 at the end of each of the next ten years. Option 3 Receive CAD 5,000 at the end of each of the next ten years plus CAD 10,000 at the end of each of the ten subsequent years. The interest rate is 5.0%, compounded annually. REQUIRED: 1. Which option should Jane select?

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.20MCE

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