Question
Congratulations, you won a lottery of $10 million! You are offered three options to receive your windfall: A) A lump sum of $10 million received
Congratulations, you won a lottery of $10 million! You are offered three options to receive your windfall:
A) A lump sum of $10 million received immediately
B) An annual payment of $500,000 for 30 years
C) A monthly payment of $50,000 for 30 years
a. If the discount rate is 7%, which option would you choose? Show your work.
b. Calculate the effective annual rate for option C.
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Digital Business And Electronic Commerce
Authors: Bernd W Wirtz
1st Edition
3030634817, 9783030634810
