In the year 2000, McDonald's was running a game called Monopoly. For every item you purchased at the restaurant, you earned a ticket to enter into the game. The highest prize offered two options: (a) $1,000,000 in one installment; or (b) $100,000 to be paid annually during 15 years, starting with one installment at the year 2000. Suppose that the interest rate is 10%. Which option would a savvy financial investor prefer? O Option (a) O Option (b) Question 13 Consider a perpetual uniform cash flow that pays x, dollars for infinitely many periods: O T P = limr-o E= *t : where & = 1 is the discount factor and r is the interest rate. 1+r What is the value of P? Select all that apply. (주):
In the year 2000, McDonald's was running a game called Monopoly. For every item you purchased at the restaurant, you earned a ticket to enter into the game. The highest prize offered two options: (a) $1,000,000 in one installment; or (b) $100,000 to be paid annually during 15 years, starting with one installment at the year 2000. Suppose that the interest rate is 10%. Which option would a savvy financial investor prefer? O Option (a) O Option (b) Question 13 Consider a perpetual uniform cash flow that pays x, dollars for infinitely many periods: O T P = limr-o E= *t : where & = 1 is the discount factor and r is the interest rate. 1+r What is the value of P? Select all that apply. (주):
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:In the year 2000, McDonald's was running a game called Monopoly. For every item you purchased
at the restaurant, you earned a ticket to enter into the game. The highest prize offered two options:
(a) $1,000,000 in one installment; or (b) $100,000 to be paid annually during 15 years, starting with
one installment at the year 2000.
Suppose that the interest rate is 10%.
Which option would a savvy financial investor prefer?
O Option (a)
O Option (b)
Question 13
Consider a perpetual uniform cash flow that pays x, dollars for infinitely many periods:
P= lim7. E X; • 8'
where 8 = is the discount factor and r is the interest rate.
What is the value of P?
Select all that apply.
Ox (음)
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