A state commission runs a lottery in which it sells 1 million $1 tickets, one of which

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A state commission runs a lottery in which it sells 1 million $1 tickets, one of which will be selected as the grand-prize winner. The winner will receive $1 million payable in 20 annual installments of $50,000 each, with the first payment today. At an interest rate of 8 percent, what is the present value of the winner's monetary receipts? What is the lottery commission's profit?

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Managerial Economics

ISBN: 9781119554912

5th Edition

Authors: William F. Samuelson, Stephen G. Marks

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