6. Congratulations! You have just won the State Lottery. The lottery prizewas advertised as an...
90.2K
Verified Solution
Link Copied!
Question
Finance
6. Congratulations! You have just won the State Lottery. The lottery prizewas advertised as an annuitized $245 million paid out in 30 equal annual payments beginning immediately. The annual payment is determined bydividing the advertised prize by the number of payments. You now have up to 60 days to determine whether to take the cash prize or the annuity.
c. Now suppose that, as many lotteries do, the annuitized cash flows willgrow by 3% per year to keep up with inflation, but they still add up to$245 million. In this case, the first payment will be $5,149,718.53today. If you took the cash prize instead, how much would you receive(before taxes)?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
