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How much does a lottery have to take in over the course of two payments, $X today and then another $X a year from today,
How much does a lottery have to take in over the course of two payments, $X today and then another $X a year from today, in order to be able to pay out the lottery winner $300k a year forever with the first payment being a year from today. What is the value of $X in order for the present value of the cash flow to be 0? Assume your discount rate is 3% (Hint think algebra and perpetuities) WRITE FORMULA HERE! A). $5,000,000 B). $5,073,891 C). $4,926,108 D). $4,296, 108
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