Establish scholarship fund

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The winner of a lottery is given three choices for the the payments:

(a) $900,000 now;

(b) Payments of $100,000 per year for the next twelve years, starting now;

(c) Payments of $101,000 per year for twelve years, beginning in one years' time.

Determine which is the better option if the interest rate is 5% per annum.

(d) a new qusetion

How much money is needed to establish a scholarship fund paying $60,000 annually (forever) if the fund will earn interest at 6% p.a. and if the first payment is made after one year?

Reference no: EM131576352

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