Question
PART 1 After hearing a knock at your front door, you are surprised to see the Prize Patrol from your states online lottery agency. Upon
PART 1
After hearing a knock at your front door, you are surprised to see the Prize Patrol from your states online lottery agency. Upon opening your door, you learn you have won the lottery of $12.5 million. You discover that you have three options: (1) you can receive $1.25 million per year for the next 10 years, (2) you can have $10 million today, or (3) you can have $4 million today and receive $1 million for each of the next eight years. Your lawyer tells you that it is reasonable to expect to earn an annual return of 10% on investments.
- What is the present value of the above options? (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Enter your answers in whole dollar not in millions (i.e., 1,000,000 not 1.0), rounded to nearest whole dollar.)
HINT = Bold numbers below are incorrect, please assist
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2. Which option do you prefer?
Option 1
Option 2
Option 3
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