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What will be the fund balance after the last payment

    Assignment Instructions

    Assignment ID: FG133134545

    Question – Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $60,000 cash immediately, (2) $18,000 cash immediately and a six-period annuity of $7,500 beginning one year from today, or (3) a six-period annuity of $11,800 beginning one year from today.

    1. Assuming an interest rate of 5%, 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 $105,000 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?

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