单选题

Justin Banks just won the lottery and is trying to decide between the annual cash flow payment option and the lump sum option. Justin can earn 8% at the bank and the annual cash flow option is $100000/year, beginning today for 15 years. What is the annual cash flow option worth to Justin today?（）

A、 $855947.87.
B、 $1500000.00.
C、 $924423.70.

【正确答案】 C

【答案解析】

First put your calculator in the BGN.
N=15; I/Y=8; PMT=100000; CPT PV=924423.70.
Alternatively, do not set your calculator to BGN, simply multiply the ordinary annuity (end of the period payments) answer by I+I/Y. You get the annuity due answer and you don't run the risk of forgetting to reset your calculator back to the end of the period setting.