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7. Assume that you just won the state lottery. Your prize can be taken either in the form of Tshs 4 million at the end
7. Assume that you just won the state lottery. Your prize can be taken either in the form of Tshs 4 million at the end of each of the next 25 years or as a single payment of Tshs 50 million paid immediately. Required: a. If you expect to be able to earn 5 percent annually on your investments over the next 25 years (i.e. 5 percent is the appropriate discount rate), ignoring taxes and other considerations, which alternative should you take? Assume that your only decision criterion is selecting the option with the highest present value. Would your decision in part (a) be altered if you could earn 7 percent rather than 5 percent on your investments over the next 25 years? b
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