Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Allison just won the state lottery. She has the choice of receiving $30,000,000 today or $50,000,000 at the end of ten years. If she can

Allison just won the state lottery. She has the choice of receiving $30,000,000 today or $50,000,000 at the end of ten years. If she can invest her funds at 4% annually, which is the better choice and why?

Group of answer choices

$50 million ten years from now because the future value of $50 million is more than the future value of $30 million.

$30 million today because it will be worth more than $50 million ten years from now.

$50 ten years from now because it is worth $33 million in today's dollar.

$50 million ten years from now because that is worth $33,778,208.44 in today's dollar, which is more than $30 million.

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

Recommended Textbook for

Capital Markets Institutions And Instruments

Authors: Frank J. Fabozzi, Franco Modigliani

2nd Edition

0133001873, 978133001877

More Books

Students also viewed these Finance questions