Gina Portales won the $51 million lottery. She is given two options. She can receive $1.5...
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Gina Portales won the $51 million lottery. She is given two options. She can receive $1.5 million a year for the next 17 years (starting one year from today) plus an additional lump-sum payment of $25.5 million after 17 years. Or, Gina can receive 25% of the $51 million in a lump-sum payment today. Which option should Gina choose? Assume a 15% discount rate. Perform all necessary computations. Show your work and explain your answer. Gina Portales won the $51 million lottery. She is given two options. She can receive $1.5 million a year for the next 17 years (starting one year from today) plus an additional lump-sum payment of $25.5 million after 17 years. Or, Gina can receive 25% of the $51 million in a lump-sum payment today. Which option should Gina choose? Assume a 15% discount rate. Perform all necessary computations. Show your work and explain your answer.
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Answer rating: 100% (QA)
To determine which option Gina should choose we need to compare the present value of cash flows for ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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