Determine which is the most valuable prize

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Reference no: EM132057139

As winner of the Midas Touch Prime Lottery, you can choose one of the following prizes:

(a) $60,000,000 now

(b) $80,000,000 at the end of 6 years

(d) $2,550,000 a year forever. The first payment is in exactly one year.

(e) $1,250,000 one year from now which increases by 2% a year forever

If the term structure of interest rates is flat at 4%, which is the most valuable prize?

Reference no: EM132057139

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