Question

You have won the Kansas state lottery. You have to choose between two payout plans. The first would pay you $500,000 immediately. The second would pay you $50,000 per year for 20 years, with the first payment occurring at the end of period 1, and the last payment occurring at the end of period 20.
a.) If your personal discount rate is 6%, which plan has a higher economic value?
b.) If your personal discount rate is 9%, which plan has a higher economic value?


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  • CreatedAugust 07, 2015
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