Question
Lottery.Your dreams of becoming rich have just come true. You have won the State of Tranquility's Lottery. The State offers you two payment plans for
Lottery.Your dreams of becoming rich have just come true. You have won the State of Tranquility's Lottery. The State offers you two payment plans for the $6,000,000 advertised jackpot. You can take annual payments of $240,000 at the end of the year for the next 25 years or $2,357,419 today. a.If your investment rate over the next 25 years is 10%, which payoff will you choose? b. If your investment rate over the next 25 years is 7%, which payoff will you choose? c. At what investment rate will the annuity stream of $240,000 be the same as the lump-sum payment of $2,357,419? Question content area bottom Part 1 a.If your investment rate over the next 25 years is 10%, what is the present value of the $240,000 annual payments today? $enter your response here(Round to the nearest dollar.)
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