as the winner of the housecleaners sweepstakes you are entitled to one
As the winner of the Housecleaners sweepstakes, you are entitled to one of the following prizes:
A. $999,999 immediately.
B. $100,000 per year forever, starting next year.
C. $180,000 per year for 10 years starting immediately.
D. $300,000 payable every 2 years over 20 years (first payment to occur 2 years from today).
E. $39,000 starting next year growing by 6% forever.
In terms of present values, which prize should be chosen if r = 9%? Please show all your work for
each of the above and round to 0 decimal places.
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