You just won the lottery. You and your heirs will receive $40,000 per year forever, beginning one

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You just won the lottery. You and your heirs will receive $40,000 per year forever, beginning one year from now. If the present value of the lottery is $500,000, what is the discount rate used to value this perpetuity.

A. 7.5%

B. 8.0%

C. 8.5%

D. 9.0%

E. 9.5%

Related Book For answer-question

Human Resource Management

ISBN: 9780078029165

6th edition

Authors: John Bernardin

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Posted Date: Jan 18, 2021 09:01 AM

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You just won the lottery. You and your heirs will receive $40,000 per year forever, beginning one

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Expert Answer:

Let the discount rate be R Therefore 500000 40000 R R 8 which is option c Solution let xWeight less ... View the full answer

Human Resource Management

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