Make the present value of both prizes equivalent

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Reference no: EM13722953

Carol has won a prize in the "Wait To Spend" lottery. Specifically Carol has won the amount of $1500 but she must wait for 10 years to receive the money. Carol is in real need of cash and would rather receive a different prize: $525 today and then receive some unknown lump sum amount in 10 years. Using an interest rate of 5.50%, determine the unknown lump sum amount that would make the present value of both prizes equivalent.

Reference no: EM13722953

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