I have a question on how to solve this problem ? madl (see copt 25 years. t hope

Question

I have a question on how to solve this problem ?
madl (see copt 25 years. t hope she wim d thatyou vise her correndy A. vve assume an annual uterest rate of estr copy on next page option wih the gremest value today, wihich option should Sue civoose Show all work) B. Extra Credit (do only i you have a does Sue become equaly attracted to eachs of he wo sion or linear interpolation if necessary) the ends At what interest rate PAYMENT OPTION 1 THE CAPITAL PLAN-IMMEDIATE FINANCIAL SECURITY BENEFITS: PRIZE PNID OUT IN 3,.37.0 YMENT OPTION 1: $833,337.00 FINANCIAL GOAL Maxdmam capital pay out ENENT Allows for madmum unount of maneny. DLAL FOR This payment plan is good tor those who would tke to efaminate SUSAN EARSHEN inmediate access ta EAST NHERST,NY 14053-2700 charge card balaaces bome business loars cchege loans, ete YOU MUST INDICATE YOUR PREFERRED FORM OF PAYMENT. SELECT EITHER YMENT OPTION 2. PAYMENT OPTION 1 OR PA PAYMENT OPTION 2: THE GROWTH PLAN-LONG TERM FINANCIAL SECURITY BENEFITS: PRIZE PAID OUT IN: paymanta of $6,067.00 PAY EAST AMDHERST, NY 14061-2700 ind growth of principal Allows for controled growth 0000111514681208170345 aver lang periad IDEAL FOR those od of 25 years. The kay feature s plan is Vdeal for prowth over time. Simply remove the seal of your choice shown above, then afflx t to the appropriate space on the enclosed of your choice shown above, then afflx it Grand Prize Payment Option Card enclosed.

Explanation / Answer

A. Return of lump sum payment after 25 years = 833337*(108/100)^25 = 5707087.77

Return of annuity payment after 25 years = 1666675*(108/100)^25 + 1666675*(108/100)^24 + ... + 1666675*(108/100) =

So it will be better to take the annual payments over 25 years.

131591349.9

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