Calculate the present value of your prize

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Question -

a) You won a competition which will pay you £1000 a year for 20 years. You are to receive your first payment a year from now. Assuming a 3% interest rate calculate the present value of your prize.

b) The organisers of the competition have decided to give you the ?rst payment of £1000 immediately {instead of in a year's time, as mentioned above}. The total number of payments will be still 20. Assuming the same interest rate (3%), what will be the current value of your prize? Would you complain to the competition organisers about the payment date change?

Reference no: EM133088694

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