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Compare alternative assuming long-term average interest rate

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Reference no: EM132650886

Question a: You have just been notified that you have won the jackpot in a lottery. You can accept your winnings in one of the following cash flow streams. Assume you are not liable for any income taxes on the winnings. Compare the alternatives assuming a long-term average interest rate on any investments of 8%.

(1) RM 1,000,000 per year for ten years, first payment received immediately.
(2) RM 550,000 per year for twenty years, first payment received immediately.
(3) RM 70,000 per month for the next 15 years, beginning at the end of the first month.

Reference no: EM132650886

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