Question
You are a lucky winner of the $30 million state lottery. You can take your prize money either as: a) 30 payments of $1m per
You are a lucky winner of the $30 million state lottery. You can take your prize money either as:
a) 30 payments of $1m per year (starting today);
b) 15 million paid today.
If the APR is 8% with annual compounding, which option would you choose?
How much would payment option (a) be worth at t=0 / today, in millions?
Step by Step Solution
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Step: 1
To determine which option would be more beneficial we need to calculate the present value of the ...
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Macroeconomics Principles Applications And Tools
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
7th Edition
978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234
