Refer to the lottery payout options summarized in Exhibit 21-9. Requirement 1. Rather than comparing the payout

Question:

Refer to the lottery payout options summarized in Exhibit 21-9.
Requirement
1. Rather than comparing the payout options at their present values (as done in the chapter), compare the payout options at their 10 years from now.
a. Using an 8% interest rate, what is the of each payout option?
b. Rank your preference among payout options.
c. Does computing the rather than the present value of the options change your preference between payout options? Explain your reasoning.

Future Value
Future value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth...