Assuming the effective rate of interst is 12 and using the

Reference no: EM13595684

Assume that you have won the Publishers Clearing House Sweepsteaks. When you are contacted about your winnings, you are offered the following three payout options:

a. Receive $10,000,000 in cash today.

b. Receive $2,200,000 today and $1,050,000 per year for 15 years, with the first $1,050,000 payment being received one year from today.

c. Receive $1,200,000 per year for 15 years, with the first payment being received one year from today.

Assuming the effective rate of interst is 12% and using the present value concepts presented, which option should you select? Explain your answer and give supportion calculations.

Reference no: EM13595684

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