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What is DCF value of option A

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Question - You won 3rd Prize in the Lotto Max Lottery and were offered three (4) choices for your prize OR 3 different ways to receive your winnings! Option "A" is to receive $219,000 today and $300,000 in 3 years from today. Option "B" is to receive $217,000 today and end of month payments of $1,400 for 30 years. Option "C" is to receive $170,000 today and beginning of the month payments of $1,900 for 30 years but starting in 5 years from today. Option "D" is to receive $570,000 today. Using an interest rate of 4% compounded annually, discount the cash flows (DCF) and determine which option is the highest using this method. (8 marks)

a) What is "DCF" value of option "A".

b) What is the "DCF" value of option "B".

c) What is the "DCF" value of option "C".

d) What is the "DCF" value of option "D".

e) Which is highest and why?

Reference no: EM133068098

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