Arnold won the state of Nevada's lottery and there are 3 alternative payments could be receiving the payment:

1. $13 million per annum for 18 years

2. $6 million per annum in perpetuity

3. $2 million in year one, growing at 4.0% per annum in perpetuity

Which alternative payment would Arnold prefer assuming the interest rate is 5% annually?

Answer rating: 100% (QA)

To determine which payment Arnold would prefer we need to calculate the present value of eac... View the full answer