You have just won $50 million in a lottery and are offered two options: receive $40 million

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You have just won $50 million in a lottery and are offered two options: receive $40 million today or receive $5 million per year for the next 10 years. At what interest rate are you indifferent to the choice between the two options? If the interest rate is greater than the indifference rate, which do you prefer and why? If the interest rate is less than the indifference rate, which do you prefer and why?

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Introduction To Corporate Finance

ISBN: 9781118300763

3rd Edition

Authors: Laurence Booth, Sean Cleary

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