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What will be the fund balance after the last payment

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Question - Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $98,000 cash immediately, (2) $40,000 cash immediately and a six-period annuity of $9,900 beginning one year from today, or (3) a six-period of annuity of $19,800 beginning one year from today.

1. Assuming an interest rate of 6%, determine the present value for the above options. Which option should Alex choose?

2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2030. Weimer will make annual deposits of $200,000 into a special bank account at the end of each of 10 years beginning December 31, 2021. Assuming that the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2030?

Reference no: EM132818103

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