Lottery A pays $1,000 today and Lottery B pays $1,750 at the end of five years. If the discount rate is 5%, which lottery should you choose? ( Please show a detailed process) Lottery B, because its present value is $1,371 which is more than that of Lottery A. Lottery A, because its future value is $1,276. C.Lottery B, because it pays $1,750 which is more than $1,000 from Lottery A. Either option gives the same value over time

Q: You win a 1.8 million dollar lottery prize. You have a choice between recieving the winnings through…

A: Here,Lottery Prize is $1,800,000Time Period is 20 yearsAnnual Interest Rate is 4.4%

Q: You have just won the lottery and will receive $490,000 in one year. You will receive payments for…

A: Solution: When an amount is received each period at a constant growth rate per period, this is known…

Q: The prize in last week’s lottery was estimated to be worth $90 million. If you were lucky enough to…

A: Present value = Annual payment + Annual payment×1-(1+r)-(n-1)r=$3.6 million +$3.6…

Q: You have won a state lottery prize quoted as “$12 million dollar lottery”, what this really mean is…

A: Present value is an estimate of the present value of future cash values ​​that may be received at a…

Q: You have just received notification that you have won the $1 million first prize in the Centennial…

A: We need to use present value formula below to solve above problem PV =FV/(1+r)n Where PV =Present…

Q: lottery winner has a decision between a lump sum of $1,000,000 or a 20 year annuity of $100,000 paid…

A: The PV of the investment refers to the accumulated value of the discounted cash flows of the…

Q: Suppose a state lottery prize is to be paid in 25 payments of $360,000 each at the end of each of…

A: Annuity refers to the periodic payment or receipt of cash flow. The annuity period usually…

Q: Calculating Present Values You have just received notification that you have won the $1 million…

A: The present value of windfall is calculated with the help of time value of money

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A: Present Value of Ordinary Annuity refers to the concept which dictates the discounted value of a sum…

Q: The winner of a $10,000,000 prize has the following payment choices. If the interest rate is 10%,…

A: Annuity refers to series of annual payment which is paid or received at start or ending of specific…

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A: The present value of an annuity is the current worth of the cash flows at a certain discounting rate…

Q: You are planning to buy a lottery ticket for the $5,000,000 jackpot. If you have (Option A). the…

A: Option A is receiving $5,000,000 today. Present Value = $5,000,000 Interest rate, r = 5% Compounding…

Q: 1.1) You have just won the lottery and will receive $2.5 million in one year. You will receive…

A: As per Bartleby honor code, when multiple questions are asked, the expert is required only to solve…

Q: ou have just received notification that you have won the $2.5 million first prize in the Centennial…

A: Using excel PV function

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A: An ordinary annuity is a series of payments made at the end of a period with equal intervals. The…

Q: 10. Suppose you win the Publishers Clearinghouse $10 million sweepstakes. The money is paid in equal…

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A: given time = 20 first payment = $150000

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A: The present value is the value of the sum received at time 0. It is the current value of the sum…

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Q: You have won the lottery! The lottery officials have given you a choice between receiving (A)…

A: Solution Given Two options are (A) $15,000,000 today, or (B) $1,000,000 at the end of each of the…

Q: Ray and Rachel are considering the purchase of two deluxe kitchen ovens. The first store offers thee…

A: Net present value: The difference between the inflow of cash and outflow of cash during the period…

Q: How much would you accept in a lump sum today, in place of a lottery payment of $35,000 at the end…

A: Formula:

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A: Data given: Cash flow Year 1 (CF1) =$580000 n=28 years Growth (g)=3% Discount rate (r) =11%…

Q: he $37.7 million lottery payment that you just won actually pays $2.9 million per year for 13 years.…

A: Present value is current value of future cash flow discounted at an appropriate discount rate; in…

Q: he lottery commission is offering the winner of a recent jackpot a payout of 15 yearly payments…

A: 1.Present value of annuity.PV = A*wherePV = present value of annuityA = periodic paymentsr =…

Q: The $55.0 million lottery payment that you have just won actually pays $2.2 million per year for 25…

A: The present value represents the current worth of future cash flows, accounting for the time value…

Q: Suppose you won a lottery 600000 interest of 0.05 percent, they offered you many choices the first…

A: The question gives the following information: Lottery price=600,000Interest rate=0.05%

Q: Comparing Lottery Payouts A lottery winner is given two options: Option I: Receive a $20 million…

A: There are two options with different streams of cash flows. The better of the two, needs to be found…

Q: You have just received notification that you have won the $1.03 million first prize in Lamarche…

A: The time value of money is a financial concept that is used to value and measure the worth of a sum…

Q: The $45 million lottery prize that you have just won actually pays out $4.5 million a year for 20…

A: The topic is related to financial mathematics, more precisely to the process of calculating a cash…

Q: You have won a state lottery prize quoted as "$12 million dollar lottery", what this really mean is…

A: Cahs payout refers to an amount that is borrowed in total by the borrower from the lender at a…

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Q: You just won the TVM Lottery. You will receive $1 million today plus another 10 annual payments that…

A: Time value of money refers to the concept that money in hand today is worth more than the same…

Q: Find the cash value of the following lottery jackpot. Yearly jackpot payments begin immediately.…

A: Solution:-When an equal amount is received each period at beginning of the period, it is known as…

Q: Assume you win a lottery, and you are offered the following stream of payments by the lottery…

A: Future value of cash flows will be reflective of the value of cash flows in the future after…

Q: perpetual equivalent annual worth

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Q: You have just won the lottery and must decide between $3,000,000 paid in 20 annual payments o…

A: Working note:

Q: You have just received notification that you have won the $2.5 million first prize in the Centennial…

A: Given information,Future value:  millionNumber of years:  yearsDiscount rate: To calculate,Present…

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A: Present Value: It is the current worth  of a future sum of money at  a fixed  rate of return.…