You just won the initial school of finance lottery! You have won $10,000 today, $20,000 five...

You just won the initial school of finance lottery! You have won $10,000 today, $20,000 five years from today, and $50,000 ten years from today. As an alternative, you can receive your winnings as a 15 year annuity with the first payment received ten years from today. If you require a 6% return on your investment, how much annuity pay you each for you to select that option?

Expert Solution

	First compute the FV of the amounts 10 years from today
Amount received today	$17,908.48
Amount received after 5 years	$26,764.51
Amount received after 10 years	50000
Total FV at time=10	$94,672.99

Annuity amount	$9,747.79

Workings

jeff jeffy answered 11 months ago

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