lottery winner has a decision between a lump sum of $1,000,000 or a 20 year annuity of $100,000 paid at the end of each of the next 20 years. If the lottery winner could invest or borrow funds at an annual effective interest rate of 5%, which alternative would be preferred and by how much in present value?

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%

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

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

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Q: Suppose a lottery payout is $100,000 per year for the next ten years. If the annual interest rate is…

A: Money worth today is the present value of cash flow from the prize based on the time value of money.

Q: Suppose that you won $3,000,000/- in a lottery. You are given the option to take $100,000/- at the…

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Q: * The Powerball Lottery, worth $280 million, was won by a single individual. The winner was given…

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Q: The first option is the amount of $3000 in 4 years. The second option is to receive the amount of…

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Q: You have just won the state lottery and have two choices for collecting your winnings. You can…

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Q: If you were the $10,000,000 winner of the Mega-Millions Lottery, which payout option would be the…

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

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Q: 3: A lottery winner has a decision between a lump sum of $1,000,000 or a 20 year annuity of $100,000…

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Q: Bill Padley expects to invest $15,000 for 5 years, after which he wants to receive $22,039.50. What…

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Q: You won a 1.5 million lottery. You are given the following options to get paid on your winnings. If…

A:

Q: perpetual equivalent annual worth

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A: Working note:

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

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