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a. Assume that you just $25 million in the Texas lottery, and hence the state will pay you 20 annual payments of $1.25 million at
| a. Assume that you just $25 million in the Texas lottery, and hence the state will pay you 20 annual payments of $1.25 million at the end of each year. If the rate of return on securities of similar risk to the lottery earning (e.g., the rate on 20-year U.S. Treasury bonds) is 5%, what is the present value of your winnings? | |||||||
| b. Considering this, which option should you take? Explain your answer. | |||||||
| - Option 1: a lump sum payment of $25 million up front | |||||||
| - Option 2: 20 annual payments of $1.5 million | |||||||
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Entrepreneurship
Authors: Andrew Zacharakis, William D Bygrave
5th Edition
1119563097, 9781119563099
