solve a and b. a-) Assume you have won the Super Lotto jackpot worth 45 Million USD in the USA. You are offered two alternatives. In the first alternative, 150,000 USD will be paid at the end of each month (300 months) for the next 25 years. The second alternative is a one-time payment of 15 million USD. If it is known that the monthly interest rate is 1 percent (12 percent per year) and will not change for 25 years, find out which option is more attractive. b. Consider accepting the installment option among the alternatives in A option. You wanted to prepare a retirement plan for yourself after 25 years. The content of this plan is as follows. At the end of 25 years, after the payments from Super Lotto are over, you should have such a savings that you can spend 75,000 USD at the end of each month for the next 15 years covering the retirement period. In line with this plan, how much of the 150,000 USD payment you will receive from the lottery in the first 300 months (during the period of payment of the installment payments) is spent and the remainder must be evaluated at the bank with 1 percent monthly interest (12 percent annually).
solve a and b.
a-) Assume you have won the Super Lotto jackpot worth 45 Million USD in the USA. You are offered two alternatives. In the first alternative, 150,000 USD will be paid at the end of each month (300 months) for the next 25 years. The second alternative is a one-time payment of 15 million USD. If it is known that the monthly interest rate is 1 percent (12 percent per year) and will not change for 25 years, find out which option is more attractive.
b. Consider accepting the installment option among the alternatives in A option. You wanted to prepare a retirement plan for yourself after 25 years. The content of this plan is as follows. At the end of 25 years, after the payments from Super Lotto are over, you should have such a savings that you can spend 75,000 USD at the end of each month for the next 15 years covering the retirement period. In line with this plan, how much of the 150,000 USD payment you will receive from the lottery in the first 300 months (during the period of payment of the installment payments) is spent and the remainder must be evaluated at the bank with 1 percent monthly interest (12 percent annually).
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