Suppose you just won the state lottery, and you have a choice between receiving $4,500,000 today or a 20-year annuity of $250,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes. Select the correct answer.   a. 1.83%     b. 0.23%     c. 1.43%     d. 0.63%     e. 1.03%

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A:

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A: The present value of an annuity is the current worth of the cash flows at a certain discounting rate…

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A: IRR method provides a benchmark return for equating future worth and present worth.

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A: Given:

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Q: 3. You won the lottery!  You are considering whether or not to accept a lump sum amount or an annual…

A: Annuity means a series of finite number of payments which are the same in size and made in equal…

Q: Suppose you just won the state lottery, and you have a choice between receiving $4,500,000 today or…

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Q: Assume you win a lottery that will pay you $10,000 immediately, plus $20,000 one year from now,…

A: The present value of future cash flows will be calculated by discounting of the future cash flows…

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Q: how large must the annual annuity payments be to make you indifferent between the two​ choices?

A: Present Value: It is the present worth of the future amount or future annuity payments.  These…

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A:

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