Answered: Option #1: Option #2: Option #3:…

Option #1: Option #2: Option #3: $10,000,000 after three years $12,000,000 after five years $2,150,000 per year for five years

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Using the time value of money

Congratulations! You have won a state lottery. The state lottery offers you the following (after-tax) payout options:

Assuming you can earn 6% on your funds, which option would you prefer?

Option #1:
Option #2:
Option #3: $10,000,000 after three years
$12,000,000 after five years
$2,150,000 per year for five years

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