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You have been given a choice between two retirement policies as described below
You have been given a choice between two retirement policies as described below. Policy A: You will receive equal annual payments of $10,000 beginning from end of this year for 10 years. Policy B: You will receive one lump sum of $100,000 in 5 years from now. Which policy would you choose? Assume the rate of interest is 6 percent
Expert Solution
Hence choose policy B as it has highest present value
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