Lottery. Your dreams of becoming rich have just come true. You have won the State of Tranquility's Lottery. The State offers you two payment plans for the $1,000,000 3aVEHISed jackpol $20,000 at the end of the year for the next 50 years or $166,090 today. payiem a. If your investment rate over the next 50 years is 14%. which payoff will you choose? b. If your investment rate over the next 50 years is 10%, which payoff will you choose? c. At what investment rate will the annuity stream of $20,000 be the same as the lump-sum payment of $166,090? a. If your investment rate over the next 50 years is 14%, what is the present value of the $20,000 annual payments today? $ (Round to the nearest dollar)
Lottery. Your dreams of becoming rich have just come true. You have won the State of Tranquility's Lottery. The State offers you two payment plans for the $1,000,000 3aVEHISed jackpol $20,000 at the end of the year for the next 50 years or $166,090 today. payiem a. If your investment rate over the next 50 years is 14%. which payoff will you choose? b. If your investment rate over the next 50 years is 10%, which payoff will you choose? c. At what investment rate will the annuity stream of $20,000 be the same as the lump-sum payment of $166,090? a. If your investment rate over the next 50 years is 14%, what is the present value of the $20,000 annual payments today? $ (Round to the nearest dollar)
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:Lottery Your dreams of becoming rich have just come true. You have won the State of Tranquility's Lottery. The State offers you two payment plans for the $1.000,000 advertised jackpot. You can take annual payments of
$20,000 at the end of the year for the next 50 years or $166,090 today.
a. If your investment rate over the next 50 years is 14%, which payoff will you choose?
b. If your investment rate over the next 50 years is 10%, which payoff will you choose?
c. At what investment rate will the annuity stream of $20.000 be the same as the lump-sum payment of $166.090?
a. If your investment rate over the next 50 years is 14%, what is the present value of the $20,000 annual payments today?
(Round to the nearest dollar.)
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