Question
A. Suppose the opportunity cost of capital is 5% and you have just won a $750,000 lottery that entitles you to $75,000 at the end
A. Suppose the opportunity cost of capital is 5% and you have just won a $750,000 lottery that entitles you to $75,000 at the end of each year for the next 10 years.
1. What is the minimum lump sum cash payment you would be willing to take now in lieu of the IO-year annuity?
2. What is the minimum lump sum you would be willing to accept at the end of the 10 years in lieu of the annuity?
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Accounting Information Systems
Authors: Ulric Gelinas, Richard Dull, Patrick Wheeler
10th Edition
113393594X, 9781133935940
