Question
If you win the lottery and can choose - $10,000 today, or - $2,000 at the end of each year for 6 years, which should
If you win the lottery and can choose
- $10,000 today, or
- $2,000 at the end of each year for 6 years,
which should you choose? Consider only the value of the options in your analysis. Use an interest rate of 6%.
None of the choices is correct.
Take the $2,000 for 6 years because it is worth $12,000 in today's dollars.
Take the $10,000 today because it is worth more than $2,000 spread over 6 years.
Take the $2,000 for 6 years because it is worth $10,484 in today's dollars.
Take the $2,000 for 6 years because it is worth $10,316 in today's dollars.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started