Question
Congratulations! You have just won your states local lottery. The lottery will pay out $1,000,000 at the end of each year for the next 25
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Congratulations! You have just won your states local lottery. The lottery will pay out $1,000,000 at the end of each year for the next 25 years. While the Lottery Commission refers to this as a $25,000,000 jackpot, if you choose the cash option, they will give you much less than that; you can receive a lump sum payment today equal to the present value of the ordinary annuity instead of the 25 annual payments. If the discount rate that the Lottery Commission uses to determine the lump sum payoff is 7.5%, what is your payoff if you select the cash option? Could you solve using Financial Calculator TI BA II Plus?
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$9,147,286.58
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$11,146,945.86
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$16,481,514.59
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$19,072715.05
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Foundations Of Financial Management
Authors: Stanley Block
8th Canadian Edition
0070965447, 9780070965447
