Suppose that, in their divorce settlement, Ashton Kutcher offers Demi Moore $16 million
spread evenly over 8 years (with the 1st payment upfront and the 2nd payment at the end
of year 1), but she instead demands $12 million upfront. If the appropriate discount rate
is 5 percent, which alternative is better for Ashton and which for Demi? What if the
discount rate is 10 percent?