Determine the unknown lump sum amount

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Question - Imagine you have won the lump sum amount of $2150 in a recent contest. However, you must wait until the end of 8 years to receive the money.

However, you would prefer a different pattern of payments: $325 today and then receive some unknown LUMP SUM (i.e. one time) amount that will be received in 8 years.

Using an interest rate of 4.50%, determine the unknown lump sum amount that would make the present value of both prizes equivalent.

Reference no: EM133155462

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