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Which of the prizes has the highest present value

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Reference no: EM132576154

Question 1: You have just won a prize, which gives you a choice as to how you receive the payments. If the interest rate is 10% per annum, compounded annually, which of the following prizes has the highest present value?

Option A. $2,000,000 immediately

Option B. An ordinary annuity of $300,000 per year for 10 years, starting one year from now

Option C. $3,000,000 at the end of 5 years

Option D. A perpetuity of $250,000 per year, starting one year from now.

Reference no: EM132576154

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