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Question

**(a) decide whether the problem relates to an ordinary annuity or an annuity due and then (b) solve the problem.**

Dr. Jane Kodiak plans to sell her practice to an HMO. The HMO will pay her $\$ 1.5$ million now or will make a $\$ 500,000$ partial payment now and additional payments of $\$ 140,000$ at the end of each year for the next $10$ years. If money is worth $6.5 \%$ compounded annually, is it better to take $\$ 1.5$ million now or $\$ 500,000$ now and $\$ 140,000$ at the end of each year for the next $10$ years? Justify your choice.

Solution

VerifiedAnswered 1 year ago

Answered 1 year ago

Step 1

1 of 10In this exercise, the task is to determine whether the example describes the ordinary annuity or annuity due and then to determine what is needed, considering the given input data.

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