Problem related to valuable prize

Reference no: EM13133973

As the winner of a breakfast cereal competition, you can choose between the prizes listed below. If the interest rate is 12 percent, which prize is the most valuable?

1. $100,000 now.

2. $195,000 at the end of five years.

3. $11,400 a year forever.

4. $19,000 each year for 10 years.

5. $6,500 next year and increasing by 5 percent a year forever.

Reference no: EM13133973

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