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Determine the unknown lump sum amount

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Sam has just won the lottery. Specifically, Sam has won the lump sum amount of $2000, but he must wait until the end of 3 years to receive the money. Sam is in need of cash and would rather receive a different pattern of payments: $325 today and then receive some unknown lump sum amount that will be received in 3 years. Using an interest rate of7.50%, determine the unknown lump sum amount that would make the present value of both prizes equivalent.

Reference no: EM131238353

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