Using the discount rate of 5 percent based on present

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You have just won the lottery ! However, the lottery bureau has just informed you that you can take your winnings in one of two ways. Choice X pays $ 1,000,000. Choice Y pays $1,750,000 at the end of five years from now. Using a discount rate of 5 percent, based on present values, which would you choose? What do your results suggest as a general rule for approching such problems?

Reference no: EM13478428

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