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Explain the annual installments

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You win the lottery. You can either have $850,000 right now, or $1,000,000 paid in 5 annual installments of $200,000 starting next year. If the interest rate is 6% (0.06), which will you choose? Why? What if the interest rate is 4% (0.04)? Explain.

Reference no: EM133078574

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