Several years ago, an individual won $27 million in the state lottery. To pay off the winner, the state planned to make an initial $1 million payment immediately followed by equal annual payments of $1.3 million at the end of each year for the next 20 years. Just before receiving any money, the person offered to sell the winning ticket back to the state for a one-time immediate payment of $14.4 million. If the state uses a 6%/year MARR, should it accept the offer? Use a present worth analysis.
Several years ago, an individual won $27 million in the state lottery. To pay off the winner, the state planned to make an initial $1 million payment immediately followed by equal annual payments of $1.3 million at the end of each year for the next 20 years. Just before receiving any money, the person offered to sell the winning ticket back to the state for a one-time immediate payment of $14.4 million. If the state uses a 6%/year MARR, should it accept the offer? Use a present worth analysis.
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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Several years ago, an individual won $27 million in the state lottery. To pay off the winner, the state planned to make an initial $1 million payment immediately followed by equal annual payments of $1.3 million at the end of each year for the next 20 years. Just before receiving any money, the person offered to sell the winning ticket back to the state for a one-time immediate payment of $14.4 million. If the state uses a 6%/year MARR, should it accept the offer? Use a present worth analysis.
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