A winning lottery ticket offers the following two options: Option 1: A single payment of $5,000,000 today or Option 2: $2,500,000 today followed by annual payments of $1,000,000 for the next three years. a. If money can earn 6.9% compounded quarterly, which option should the winner select? O The winner should select the payment plan. The winner should select the single payment today. b. How much better is the option selected in part (a) in current dollars? Number

The winner of a lottery is given a choice of $1,000,000 cash today or $2,000,000 paid out as follows: $100,000 cash per year for 20 years with the first payment today and 19 subsequent annual payments thereafter. The inflation rate is expected to be constant at 4%/yr over the award period and the winner’s TVOM (real interest rate) is 3.5%/yr. Solve, a. Which choice is better for the winner? Neglect the effect of taxes, life span, and uncertainty. b. At what value of inflation are the two choices economically equivalent? c. What would you do if you do NOT neglect the effect of life span and uncertainty?

Please correct answer and don't use hand rating

You are the lucky winner of the $30 million state lottery. You can take your prize money either as (a) 30 payments of $1 million per year (starting in one year), or (b) $15 million paid today. If the interest rate is 5.5%, which option should you take? Select one: a. Option a, as it is equivalent to 15 333 101 $ b. Option a, as it is equivalent to 15 141 074 $ c. Option b d. Option a, as it is equivalent to 15 372 451 $

Lottery A pays $1,000 today and Lottery B pays $1,750 at the end of five years. If the discount rate is 5%, which lottery should you choose? ( Please show a detailed process) Lottery B, because its present value is $1,371 which is more than that of Lottery A. Lottery A, because its future value is $1,276. C.Lottery B, because it pays $1,750 which is more than $1,000 from Lottery A. Either option gives the same value over time.

You are planning to buy a lottery ticket for the $5,000,000 jackpot. If you have (Option A). the cash option of receiving $5,000,000 today or you can opt to choose (Option B). the 20 payments of $400,000. Your investment account earns 5% interest compounded annually. What is the future value of OPTION A? (Please use two decimals). Answer: 16,035,677.36

You have just won a two-part lottery! The first part will pay you $50,000 at the end of each of the next 20 years. The second part will pay you $1,000 at the end of each month over the same 20 year period. Assuming a discount rate of 7%, what is the present value of your winnings? $658,683 $567,572 $529,303 $610,462 $495,048

You have won the lottery! The lottery officials have given you a choice between receiving (A) $15,000,000 today, or (B) $1,000,000 at the end of each of the next 20 years. Assuming a market interest rate of 4% (compounded annually), which option is worth more to you today, and by how much?

Suppose you won the lottery that will payout over 20 years. The 1st payment you receive will be $150,000. Every year after that your payment will grow by 6.1 % what is the present value of your winnings if the appropriate discount value is 12.3%

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.