You just won the lottery. The jackpot is advertised as $600 million. You have two choices...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You just won the lottery. The jackpot is advertised as $600 million. You have two choices for how to receive the winnings. The prize may be paid as an annual annuity of $20 million over 29 years, with the first payment today and the 30th payment 29 years from today, or as a single lump sum payment of $250 million today. If you expect to earn 6.5% on your investments, which payout option should you choose? O The lump sum payment of $600 million today because it offers the highest present value. O The annual payout of $20 over the next 29 years because it offers the higher present value. O The two options are equivalent once the TVM is considered. O The annual payout of $20 over the next 29 years because the sum of the payments is $600 million while the lump sum is only $250 million. You just won the lottery. The jackpot is advertised as $600 million. You have two choices for how to receive the winnings. The prize may be paid as an annual annuity of $20 million over 29 years, with the first payment today and the 30th payment 29 years from today, or as a single lump sum payment of $250 million today. If you expect to earn 6.5% on your investments, which payout option should you choose? O The lump sum payment of $600 million today because it offers the highest present value. O The annual payout of $20 over the next 29 years because it offers the higher present value. O The two options are equivalent once the TVM is considered. O The annual payout of $20 over the next 29 years because the sum of the payments is $600 million while the lump sum is only $250 million.
Expert Answer:
Answer rating: 100% (QA)
Answer B The annual payout of 20 over the next 29 years because it offers the higher pres... View the full answer
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
Students also viewed these accounting questions
-
For the following questions, assume an annual annuity of $1,000 and a required return of 12%. a. What is the future value of a ten-year ordinary annuity? b. If you earned an additional years worth of...
-
You just won the TVM Lottery. You will receive $1 million today plus another 10 annual payments that increase by $610,000 per year. Thus, in one year you receive $1.61 million. In two years, you get...
-
You have just won the lottery and will receive $1,000,000 in one year. You will receive payments for 30 years, which will increase 5 percent per year. If the appropriate discount rate is 8 percent,...
-
Find a formula for the function 9(2) as a transformation of the function f(x). -3-2-1 0 x 23 -1 0 1 2 3 4 5 -690 6 -3 -12 g(x) 3 f(x)-1 1 2 -30-214
-
When are adjusting entries made to the worksheet, and what is their purpose? When are the corresponding voucher entries made?
-
A meteor with a volume of 1.0 km 3 strikes the Earth at the equator as shown in Figure P9.48, and all the fragments stick to the surface.? (a) What is the magnitude of the change in the angular...
-
Eco-control has been explained with use of three different approaches.What is eco-control? Explain the difference between the three approaches. Is there a link between the integrated approach and...
-
In Problem Sl-5 assume that Nicole, with the help of a financial newsletter and some library research, has been able to assign probabilities to each of the possible interest rates during the next...
-
identify a specific scenario you are familiar with gather relevant data, and develop a interactiv dash board that is suitable for use by the manager. clearly describe the scenario, identify the data...
-
Lets roll some dice! Write a program that allows the user to choose to roll between 1 and 100 dice between 1 and 1000 times. The program should simulate each roll of the die/dice by generating one...
-
We are planning for the investment portfolio for a new customer of our consultancy firm. Analyzing the past investments of the customer, we observed that the utility function is of the type: X 2 U...
-
Approach these journals as (a) an opportunity to reflect upon and apply what you learn each week based on the assigned readings, discussions, and activities, and (b) an opportunity to share your...
-
What is the Null Hypothesis (Ho) for this experiment? Diameter of Air Pocket to nearest 0.5 mm Photosynthesis Experiment using a Carbon Source Replicate light/+NaHCO3 light/+NaHCO3 + breath 1 6.4 9.2...
-
k On January 1, 2024, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a hote requiring payment of $528,000 by Elmira on December 31,...
-
A 55.0-g Super Ball traveling at 27.0 m/s bounces off a brick wall and rebounds at 21.0 m/s. A high-speed camera records this event. If the ball is in contact with the wall for 3.50 ms, what is the...
-
Cedric seeks your advice. Cedric has served a Claim and Statement of Claim on Liu Kwok Wah ("KW") almost 90 days ago for an action commenced in the District Court at Brisbane in relation to a breach...
-
1. In what way is Michael A. Todman exercising leadership? 2. Identify at least three leadership roles Todman emphasizes as president 01 Whirlpool. International. 3. To what extent does it appear...
-
What kind of financial pressures can an LBO cause?
-
Suppose I run a fast-food restaurant and I know my customers come in on a limited budget. Almost everyone that comes in for lunch buys a soft-drink. Now suppose it costs me virtually nothing to serve...
-
A: Consider a firm whose technology has decreasing returns to scale throughout and who faces a recurring fixed cost. Denote the level of capita chosen in the long run at the lowest point of the long...
-
Rating Movies on a Numerical Scale: My wife and I often go to movies and afterwards assign a rating ranging from0 to 10 to the movie we saw. A: Suppose we go to see a double feature, first Terminator...
-
Which of the following auditing procedures most likely would provide assurance about a manufacturing entity's inventory valuation? a. Testing the entity's computation of standard overhead rates. b....
-
Which of the following audit procedures probably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories? a. Trace test counts...
-
Cutoff tests designed to detect purchases made before the end of the year that have been recorded in the subsequent year most likely would provide assurance about management's assertion of a....
Study smarter with the SolutionInn App