Financial management

you have won a lottery with two option.
A: take 500000 immediately,
B: take 40000 at the end of every year 1000000, over a period of 25 years.
Required rate of return is 5%

Q1. what option would you prefer?
Q2. What will be your answer if rate of return is 7%
Q3. At what rate of return will be indifferent to the two options?

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  3. 👁 121
  1. Since I'm 77 years old, I'll take the $500,000 immediately. I won't live another 25 years.

    Which option do you prefer?

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    2. 👎 0

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