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Which option is financially better for james

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Reference no: EM133076184

James Holloway has just won a television game show. There are two ways in which James can receive his price:

Option 1: a once-off payment of $100,000 in 18 months.

Option 2: a payment of $5000 a month for 18 months with the payment increases by 0.5% every month.

Assuming that the monthly discount rate is 2% and that interest rate compounds monthly, which option is financially better for James?

Reference no: EM133076184

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