The Solution to This Problem Requires Time Value of Money

Multiple Choice

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations.
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Winston wins the lottery.He wins $20,000 per year to be paid to him for ten years.The state offers him the choice of a cash settlement now instead of the annual payments for ten years.If the interest rate is 6%,what is the amount the state will offer for a settlement today?

A) $147,200
B) $154,440
C) $175,000
D) $200,000