Sally Has Just Won the Lottery

question 73

Multiple Choice

Sally has just won the lottery.She is given two equivalent choices as to how the winnings will be paid.She can receive a lump sum of $A today or she can receive 20 semi-annual payments.The first payment would be $10,000 and is to be paid today,with each succeeding payment being 91% of the preceding payment [2^nd payment = 10,000(0.91) ].If the interest rate is j₂ = 8%,what is the value of A?

• A)$65,155.39
• B)$71,599.33
• C)$73,672.34
• D)$74,463.30

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