Question

Consider the decision you might have to make if you won a state lottery worth $105 million. Which would you choose: a lump-sum payment of $54 million today or a payment of $3.5 million each year for the next 30 years? Which should you choose?
a. If your opportunity cost is 6 percent, which alternative should you select?
b. At what opportunity cost would you be indifferent between the two alternatives?



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  • CreatedNovember 24, 2014
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