Sterling had led 2-0 at half-time, but Alexander-Arnold staged a late fight back and, with the momentum in his favour, he struck first to win the game in extra time.
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“Fair play to him,” said the Manchester City winger afterwards.
“I should have finished that game and good luck to him in the final.”
Alexander-Arnold pulled one back through Roberto Firmino and, with City's No.7 ruing two strikes that cannoned back off the woodwork, his international colleague hit an emphatic equaliser with Jordan Henderson to take the game to extra time.
There, the Liverpool full-back settled the tie in an instant, converting a close range winner with Firmino in the second minute of the additional period.
The ePremier League Invitational prize fund is being donated to the #PlayersTogether initiative, which was created by Premier League players as a collective way of generating funds for the National Health Service and distributing them where they are needed most.