Marcus has won a $3,000,000 state lottery. He can take his prize as either 20 yearly payments of $150,000 or a lump sum of $1,275,000. Which is the better option? Assume an interest rate of 10%.Select the correct choice below and, if necessary, fill in the answer box to complete your choice.(Round to the nearest dollar as needed.)- **A.** The present value of the lottery winnings is $_____; this is worse than the lump sum of $1,275,000.- **B.** The present value of the lottery winnings is $_____; this is better than the lump sum of $1,275,000.- **C.** The present value of the lottery winnings is the same as the lump sum of $1,275,000.Click to select and enter your answer(s) and then click Check Answer.(All parts: Clear All)

PV It is a current worth of the cash flows stream/ future sum of money for a time period at a…

Marcus has won a $3,000,000 state lottery. He can take his prize as either 20 yearly payments of $150,000 or a lump sum of $1,275,000. Which is the better option? Assume an interest rate of 10%. Select the correct choice below and, if necessary, fill in the answer box to complete your choice. (Round to the nearest dollar as needed.) O A. The present value of the lottery winnings is $ this is worse than the lump sum of $1,275,000. O B. The present value of the lottery winnings is $ this is better than the lump sum of $1,275,000. O C. The present value of the lottery winnings is the same as the lump sum of $1,275,000.

Marcus has won a $3,000,000 state lottery. He can take his prize as either 20 yearly payments of $150,000 or a lump sum of $1,275,000. Which is the better option? Assume an interest rate of 10%. Select the correct choice below and, if necessary, fill in the answer box to complete your choice. (Round to the nearest dollar as needed.) O A. The present value of the lottery winnings is $ this is worse than the lump sum of $1,275,000. O B. The present value of the lottery winnings is $ this is better than the lump sum of $1,275,000. O C. The present value of the lottery winnings is the same as the lump sum of $1,275,000.

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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Peter won a lottery and must decide among the following options: a. $260 at the beginning of every month for 5 years starting 3 years from now. b. $13,250 8.5 years from now. Money' is worth 3.4% compounded monthly. By how much the best option exceed the worst one, based on the present value of the offer?
You won a lottery of $1,000,000. Office offered two options: the first one you can take it today a $500,000 today (after tax), or the second option: $50,000 per year for the rest of your life (you are 20 and expected to live a long time, like 200…) if the interest rate is 10%. What is the value of the second option today?
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