You have just won $1 million in Lotto. You have a choiceof either receiving the cash now or in 3 years time. Whatwould you choose and why?

If I had to choose between receiving $1 million in lotto winnings now or in 3 years, I would choose…

Answered: You have just won $1 million in Lotto.…

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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Similar questions

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?
You just won the TVM Lottery. You will receive $1 million today plus another 10 annual payments that increase by $450,000 per year. Thus, in one year, you receive $1.45 million. In two years, you get $1.9 million, and so on. If the appropriate interest rate is 6.2 percent, what is the value of your winnings today? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Present value : $ 22,656,191.50
Tom just won a lottery. he plans to create a money market certificate in a bank to prepare a down payment for a house $400,000. The down payment is 20% of the house price, and the current five-year APY is 3.25%. How much should you put in the money market certificate account to accumulate the down payment? Group of answer choices $340,886.41 $93,872.91 $469,334.56 $68,117.28
You just won a prize that comes with two payout choices. The first option is to get $130,000 rightnow and nothing hereafter. The second option is to get $94,000 right now and $11,000 three years fromnow (and nothing after that). If your discount rate is 6 % which should you take?
Assume you won a million dollars in the Texas Lottery. You have two options: 1) collect S426,000 now or 2) receive $50,000 a year (end-of-year) for the next 20 years. Which option would you opt for assuming a 10% interest rate? Use an Excel formula to justify your choice.
Suppose that Dmitri just won the lottery and must choose between three award options: 1. A lump sum of $40,000,000 received today 2. 15 end-of-year payments of $5,000,000 3. 40 end-of-year payments of $3,600,000 Assume the interest rate is 8.00%, entered as 8 on your financial calculator. Note: Take the absolute value of the present value when answering this question. Using a financial calculator yields a present value for option 2 of approximately and a present value for option 3 of approximately (when the interest rate is 8.00%). Based on this, Dmitri should choose option if he seeks to maximize present value. Now assume the interest rate is 9.00%, entered as 9 on your financial calculator. Note: Take the absolute value of the present value when answering this question. Using the table you just filled out and a financial calculator, yields a present value for option 2 of approximately and a present value for option 3 of approximately v (when the interest rate is 9.00%). Based on…
you have just won the lottery and will receive $460,000 in one year. you will receive payments for 21 years, and the payments will increase 4 percent per year. if the appropriate discount rate is 11 percent, what is the present value of your winnings? Please explain how to solve using the financial calculator to show and explain steps thanks
Congratulations! You have just won a small lottery. Lottery officials give you three alternatives for receiving your winnings: a)$8000 now b)$1000 per year for 12 years c)$15000 in 10 years If you can earn 6.5% on your money, which alternative should you choose?
You have just won the Super Duper Lotto. Although the prize is advertised as $30 million, you actually get $10 million now and $1 million per year for the next 20 years (starting one year from now). Your discount rate is 7%. What is present value of your winnings? (Do not round intermediate calculations. Report your result in millions of dollars. Round the final answers to 2 decimal places. Omit $ sign and the word "million" in your response. For example, if your answer is $1,234,567 just write 1.23.)
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You have just won $1 million in Lotto. You have a choice of either receiving the cash now or in 3 years time. What would you choose and why?