Jack and Jill bought a state lottery ticket and won a $25 million price that pays the
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Question:
Jack and Jill bought a state lottery ticket and won a $25 million price that pays the winner in 10 years ($2.5 million a year for 10 years). The 3 options they have in mind are
a. collecting the prize each year and putting 80% in a fixed deposit account yielding 4% p.a.;
b. collecting the prize at once from the lottery agency, which will pay them $21.32 million at one time; or
c. selling the winning ticket to XYZ Private Capital, which will pay them an amount based on their IRR of 3.5% p.a. and a gross margin of 5%. Which of these options should Jack and Jill choose?
Related Book For
Financial Management for Public Health and Not for Profit Organizations
ISBN: 978-0132805667
4th edition
Authors: Steven A. Finkler, Thad Calabrese
Posted Date: