Question: CHAPTER 9 : TIME VALUE ANALYSIS Homework Problem 4 . 4 Assume that you just $ 3 5 million in the Texas lottery, and hence

CHAPTER 9: TIME VALUE ANALYSIS
Homework Problem 4.4
Assume that you just $35 million in the Texas lottery, and hence the state will pay you 20 annual lottery earning (e.g., the rate on 20-year U.S. Treasury bonds) is 6%.
a. What is the present value of your winnings?
b. You are now given the following options for distributing your winnings:
Option 1: lump sum payment of the entire amount
Option 2: annual payments as described above Which option would you choose? Why?
CHAPTER 9: TIME VALUE ANALYSIS Homework Problem 4.4 Assume that you

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