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Suppose you won $2 million in a lottery and it is to be paid in 25 equal annual installments starting today. An alternative to the
Suppose you won $2 million in a lottery and it is to be paid in 25 equal annual installments starting today. An alternative to the installment plan is to receive a lump sum payment today. If the applicable discount rate was 7% per year, how large would the lump sum payment have to be? Round to the nearest cent. (Hint: The lump sum amount needs to equal the present value of the installments)
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