3. You and your brother Bill play the lottery each week. After 5 years of playing...

 

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3. You and your brother Bill play the lottery each week. After 5 years of playing you finally won a prize. The Ontario Lottery commission has given you two options. Option 1 is for you to take a lump sum payment of $1,000, Option 2 will pay you $1,750 at the end of 5 years. Using a discount rate of 5%, which would you choose? Using the same discount rate of 5%, based on future values, which would you choose? Which option is more advantageous purely based on the concept of the time value of money? 3. You and your brother Bill play the lottery each week. After 5 years of playing you finally won a prize. The Ontario Lottery commission has given you two options. Option 1 is for you to take a lump sum payment of $1,000, Option 2 will pay you $1,750 at the end of 5 years. Using a discount rate of 5%, which would you choose? Using the same discount rate of 5%, based on future values, which would you choose? Which option is more advantageous purely based on the concept of the time value of money?

Answer rating: 100% (QA)

Answer a Calculating the present value of 1750 Year PVF 5 1 0952381 2 0907029 3 0... View the full answer