Assume you win a lottery that will pay you $10,000 immediately, plus $20,000 one year from now,
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Assume you win a lottery that will pay you $10,000 immediately, plus $20,000 one year from now, $30,000 two years from now, $40,000 three years from now, and $75,000 four years from now. You’re curious about how much the lottery commission might offer you as an immediate lump sum instead. What is the minimum amount you should consider accepting today instead? Use a 5% annual discount rate. Please remember that we are ignoring taxation and other considerations and basing this only on the math itself.
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The present value of 10000 to be received in one year is 997229 The present value of 20...View the full answer
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