Artificial Intelligence
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Mohamed has just won a 20 million L.E from a T.V program which will pay him 1 million at the end of each year for 20 years. An investor has offered him 10 million for these annuities. He estimates that he can earn 10 % compounded annually on any a


Based on the information provided, it is important to consider the present value of Mohamed's annuities. The present value refers to the current value of future cash flows, taking into account the time value of money. To determine the present value, we can use the formula PV = PMT * [(1 - (1 + r)^-n) / r] where PV is the present value, PMT is the payment amount, r is the annual interest rate, and n is the number of periods. In this case, PMT = 1 million L.E, r = 10% or 0.1, and n = 20. Substituting these values into the formula, we get PV = 1 million * [(1 - (1 + 0.1)^-20) / 0.1] = 1 million * [9.3294] = 9.3294 million L.E. This means that the present value of Mohamed's annuities is 9.3294 million L.E. Therefore, the investor's offer of 10 million L.E is higher than the present value of the annuities, making it a good deal for Mohamed. In addition, Mohamed can use the 10 million L.E to earn 10% annually for 20 years, which would yield a total of 35.85 million L.E. This is higher than the total amount he would receive from the annuities (20 million L.E). Therefore, financially speaking, it would be beneficial for Mohamed to accept the investor's offer and invest the 10 million L.E rather than receiving the annuity payments. However, it is important for Mohamed to carefully consider the terms and conditions of the offer and consult with a financial advisor before making any decision. He should also evaluate his personal financial goals and priorities to determine if selling the annuities is the best option for him in the long run.