Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $20,000 cash immediately and a six-period annuity of $8,000 beginning one year from today, or (3) a six-period annuity of $13,000 beginning one year from today.
Assuming an interest rate of 6%, determine the present value for the above options. Which option should Alex choose?
A. options 1
B. options 2
C. options 3