Question
you are the lucky winner of the $30 million state lottery. you can take your prize money either as (a) $15 million paid today, or
you are the lucky winner of the $30 million state lottery. you can take your prize money either as (a) $15 million paid today, or (b)30 payments of $1 million per year (starting today). If the interest rate is 8%, which option should you take?
compare PV of (a) and (b) and take the option with higher PV
option(a): is a single CF with PV of $15 million
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The Handbook Of Financial Instruments
Authors: Frank J. Fabozzi
1st Edition
0471220922, 978-0471220923
