You Just won a lottery that promise to pay you 100,000 exactly 10 years from now. Because the 100,000 is guaranteed by the government, opportunities exist to sell the claim today for an immediate single cash payment. a- What is the least you will sell your claim for it you can eam the following rates of retum on similar risk investment during the 10-year period? 1- 5% 2- 8% 3- 11% b- Rework on part a under the assumption that 100,000 payment will be received in 15 years rather than 10 years. c- Explain why you want or do not want to explain you claim.
You Just won a lottery that promise to pay you 100,000 exactly 10 years from now. Because the 100,000 is guaranteed by the government, opportunities exist to sell the claim today for an immediate single cash payment. a- What is the least you will sell your claim for it you can eam the following rates of retum on similar risk investment during the 10-year period? 1- 5% 2- 8% 3- 11% b- Rework on part a under the assumption that 100,000 payment will be received in 15 years rather than 10 years. c- Explain why you want or do not want to explain you claim.
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:You Just won a lottery that promise to pay you 100,000 exactly 10 years from now.
Because the 100,000 is guaranteed by the government, opportunities exist to sell
the claim today for an immediate single cash payment.
a- What is the least you will sell your claim for it you can eam the following
rates of return on similar risk investment during the 10-year period?
1- 5%
2- 8%
3- 11%
b- Rework on part a under the assumption that 100,000 payment will be
received in 15 years rather than 10 years.
c- Explain why you want or do not want to explain you claim.
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