Question
Mark has just won the Flyball Lottery. He has two options for receiving his prize. The first option is to accept a $126,000 cash payment
Mark has just won the Flyball Lottery. He has two options for receiving his prize. The first option is to accept a $126,000 cash payment today. The second option is to receive $16,100 at the end of each of the next 19 years and a $38,000 lump sum payment in the 20th year. Mark can invest money at a 11% rate. Click here to view the factor table. (a) Calculate the present value of the two options. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.)
Option 1 | Option 2 | |||
---|---|---|---|---|
Present value | $enter a dollar amount | $enter a dollar amount |
Which option should Mark choose to receive his winnings?
select an option Option 1Option 2 |
(b) If Mark could invest money at 14%, calculate the present value of the two options. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.)
Option 1 | Option 2 | |||
---|---|---|---|---|
Present value | $enter a dollar amount | $enter a dollar amount |
Which option should he choose?
select an option Option 1Option 2 |
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