Lumpsum future receipt, Calculate the Lumpsum future receipt., Finance Basics

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Lumpsum future receipt

Question: Mr. Handyman has been awarded a bonus for his outstanding work. His employer offers him a choice of a lump sum of USD 5,000 today, or an annuity of USD 1,250 a year for the next five years. Which option should Mr. Handyman choose if his opportunity cost is nine percent?

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Finance Basics: Lumpsum future receipt

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