Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. Gabrielle just won $1.8 million in the state lottery. She is given the option of receiving a total of S900,000 now, or she can

image text in transcribed

2. Gabrielle just won $1.8 million in the state lottery. She is given the option of receiving a total of S900,000 now, or she can elect to be paid $90,000 at the end of each of the next 20 years. If Gabrielle can earn 6% annually on her investments, from a strict economic point of view which option should she take? If Gabrielle takes the prize as an annuity, the present value of the 20-year ordinary annuity is S Round to the nearest dollar.) 1,032,293 tprese s Round to the nearest dollar.) Which alternative should be chosen? (Select the best answer below.) O A. Lump sum payment O B. Annuity payments

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions